Marvel Enterprises took care of the past, future and present Thursday as it declared independence by pacting with Merrill Lynch to produce a slate of films that will be distributed by Par and, separately, agreed to pay iconic comicbook creator Stan Lee a $10 million settlement.
Merrill Lynch’s collateral — a batch of 10 Marvel characters, including Captain America, the Avengers (actually a team of superheroes) and Nick Fury. Should the slate prove a bust, Captain America and the others would find themselves suddenly owned by a staid Wall Street financial house.
During an earnings call early Thursday, Marvel Studios chair-CEO Avi Arad said Marvel’s ability to produce its own films would be revolutionary.
Marvel also will have creative control. This will eliminate difficult situations with studios that are producing films based on Marvel characters, such as New Line and “Iron Man.”
Arad told Daily Variety on Thursday that “Iron Man” is being pushed back from 2006 to 2007 because New Line has refused to close a deal with director Nick Cassavetes, whom Marvel wants on the project.
Film slate pact is equally unprecedented for Merrill Lynch. Under the arrangement, Marvel will have access to a $525 million revolving credit line over seven years to produce up to 10 pics with budgets ranging from $45 million-$180 million.
The lucrative, exclusive distribution arrangement with Par marks Brad Grey’s first major deal as the studio’s chief exec. Grey and Arad are longtime professional acquaintances.
Merrill Lynch said the unusual financing structure probably couldn’t be replicated, considering the firepower of Marvel’s characters. The characters themselves are the assets that Merrill Lynch will use to go to capital markets and raise money.
“We’re very pleased to be working with Marvel on such an innovative transaction,” Merrill Lynch managing director and global asset-based finance group head Michael Blum told Daily Variety.
Until now, Marvel hasn’t had the funding to produce its own pics, instead licensing its characters to major studios. Many of Marvel’s A-listers are already taken — “Spider-Man” lives at Sony and “X-Men” at Fox. This summer, Fox will bow “Fantastic Four.”
Arad stressed that there are more than 5,000 other Marvel characters.
Among those being put up for collateral, Arad would only reveal the identities of Captain America, the Avengers and Nick Fury, saying the rest would be disclosed when the financing pact with Merrill is closed either in late June or early July.
The new structure will be secured by the theatrical and motion picture production and distrib rights for the 10 Marvel characters.
Marvel toppers also wouldn’t disclose which pic would be first, but that it would probably be a big-event release that would bow in late 2006 or early 2007.
By producing its own films, Marvel will gain greater access to theatrical revenue streams as well as the chance to develop a library. Also, it will receive a producer fee and retain all merchandising revenue.
Paramount isn’t putting up any production money; it will receive a fee for marketing and distributing the initial 10 movies. To maximize possible audience, none of the films will be rated R.
While Marvel toppers were eager to talk about the unique arrangement with Merrill Lynch Commercial Finance Corp., they said they weren’t allowed to discuss the terms of the unrelated settlement with Lee, except to stress that it closed the matter.
Lee, who is Marvel’s chairman emeritus and co-creator of numerous characters including Spider-Man and the X-Men, filed a lawsuit claiming that Marvel was withholding profit participation. During an earnings call early Thursday, Marvel said the $10 million settlement hurt profit in the last quarter, when profit fell to $27.7 million from $31.3 million a year ago.
Marvel shares were up 33¢ to close at $19.52 in trading Thursday.