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Article Excerpt
UNIDENTIFIED PARTICIPANT: Marvel owns many of the industry's most iconic characters, including Spiderman, X-men, the Fantastic Four, and The Incredible Hulk. The Company is recently entering production on its own, after creating significant value for several of the major studios in the past, and it's embarking on an exciting new stage in its life. This strategy got off to an enormously successful start with the release of Iron Man this summer.
Please welcome back David Maisel, Executive Vice President, Office of the Chief Executive. Thank you.
DAVID MAISEL, EVP, OFFICE OF THE CHIEF EXECUTIVE, MARVEL ENTERTAINMENT INC.: Thank you very much. It's a great pleasure to be here today. I was here two years ago at this conference, and we talked about our brands for our business, especially the launch of our new film studio. And it's nice to be back this year after for what for us is a very transformative and historic summer with the launch of that studio.
Before I get into the details on that, I'd like to give just an overview of the business.
First, of course, the Safe Harbor disclosure, which I'd appreciate everybody to read.
In terms of the overview of the business, we're actually not that complicated in the business relative to a lot of the companies that you might be looking at over the last couple of days. Marvel has been around for 70 years and is essentially a large library of intellectual property with over 5,000 characters. And our job as management history is to try and be innovative and creative in leveraging those characters and maximizing their earnings potential for shareholders.
We have a core business, which is one of the most attractive business models in entertainment, with significant cash flows from both our publishing business and our core licensing business, which I'll go into more details about; both with very conservative risk diverse approaches and very little capital requirements.
This business has a little bit over 50% operating margin and doesn't really require any material cash in the year-to-year basis. In addition to that, we have significant growth opportunities. Obviously, the unprecedented film studio opportunity, which we embarked on in practice this year but prepared for the past five years for.
Secondly, interactive growth potential, which we are very excited about. And third, an international potential for our business in consumer products and elsewhere, which we are equally excited about.
And what's nice about Marvel is all these businesses feed each owner. Success in the movie has a ripple effect through consumer products and toys and publishing and so on. It's a very, very tightly intermixed Company, where we're controlling and operating these brands and trying to maximize the returns.
As I mentioned, this is a transformative year for Marvel with the launch of the film studio. Before I get into the details about the entire business, let me go into some highlights regarding the launch of this studio. As I mentioned, we launched the first two films this year that we financed ourselves and produced ourselves, that being Iron Man and The Incredible Hulk.
Iron Man at this point is at roughly $575 million of worldwide box office, with Japan still to open September 27. $318 million of that is domestic, which I'm glad to say, makes Iron Man the 21st biggest movie of all time.
We are equally happy in making films that are favorably received by the fans, and not just do well financially; that bodes well for the future of the franchises. Cinema Score is a polling of the audience members. We received A, which is a very, very high score for Cinema Score. And it's nice as well, not always required in our types of movies, to have the critics love them and like them too.
Rotten Tomatoes, which is the website that classifies all of the material reviews and says what percent of them are positive -- and anything over 60% is viewed as fresh or very good -- Iron Man received a 93%, which we're very proud of.
This is a film that is obviously one of the phenomenons of the summer and has turned out to be the perfect start to Marvel Studios. In addition, we had a very good success with our second movie, The Incredible Hulk, which is now at [$216 million] roughly worldwide after its recent opening in Japan and China. In fact, it was the biggest film that Universal has ever distributed in China.
It's done roughly $135 million domestic box office to date. And it has the seventh largest June opening weekend ever. It really has revitalized the Hulk from the perceptions from the film that was done five years ago, and really put it back, not only in the control of Marvel Studios, but really re-energized the character for use throughout all of our businesses. We're very happy with the fan score as well, with an A minus, which is very high for Cinema Score, and a fresh rating on Rotten Tomatoes at 67%. This is a combined $835 million and counting for our two movies.
That's obviously very good for the results from Marvel from these two specific films and how it ripples through our financial results for the years to come. But it also is very important in the ripple effect in the rest of our businesses, and the opportunity to create in theme parks around the world for Iron Man and Hulk rides, consumer products and toys and so on. And most importantly, it really sets the foundation in a perfect way for the next round of growth for Marvel, the future films and the future strategy.
Stepping back now and taking a look at our overall business, and then I'll come back to the studios at the end of the presentation.
You can think of us as organized in roughly three operating divisions -- publishing, licensing, and Marvel Studios. You might remember that there used to be a toy division, which was an operation of Marvel. We've now closed that and are licensing our toys with our relationship -- which has worked out very well -- with Hasbro.
Let's jump into publishing. This...
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