The Battle for Marvel Comics

Welcome again to Garish Summit and its continuing story of intrigue among the socially prominent. There -- in stately splendor far removed from the squalid village below -- they fight their petty battles over power and money.

-- "Garish Summit"
Bob Elliott and Ray Goulding
(Bob & Ray)

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Here's something author Dan Raviv has in common with Ronald Perelman, Carl Icahn and Ike Perlmutter: none of them are comics fans.

According to Comic Wars: How Two Tycoons Battled Over the Marvel Comics Empire -- And Both Lost, Perelman, Icahn and Perlmutter had never even read a comic book. As for Raviv, a prize winning and best-selling non-fiction author and journalist, while he may have read them, he clearly is not of the geek mentality. He's a journalist with a flair for dramatizing historical situations, and has never before written a book about business or media.

Raviv's lack of fanboy obsession with the characters in the comics enables him to bring a relatively objective point of view to the financial and interpersonal dealings that went on in the infamous tug of war between Icahn and Perelman for control of Marvel, a war which ultimately made it a matter of survival for Perlmutter and partner Avi Arad [2] to try -- and succeed -- in taking over the troubled company.

Money Talks
The downside of the non-fanboy point-of-view is that Raviv's story is told mostly from the business and financial angles. Much mention is made of Arad's love of the characters, and certainly Stan Lee [3] is given his rightful due for the work he did over the decades in creating and nurturing the characters and the company. A few key artists -- Jack Kirby, Steve Ditko, John Romita -- are mentioned once or twice. Artist Herb Trimpe is quoted, and former editor-in-chief Bob Harras gets a mention or two. But for the most part, the writers, artists and editors are portrayed as virtually interchangeable, as just manufacturers of the "product" that is comics. For just one example, considering that he was a very active editor-in-chief for much of the Perelman period, it's notable that Tom DeFalco isn't mentioned even once. Also, Raviv's take on content-related matters is shaped by what he's read in the public record, as are his impressions of the fan community.

While the Marvel characters [4] -- Spider-Man [5], the Hulk, the X-Men [6] -- are colorful and exotic, and the Tycoons of the title are certainly men of oversized personalities, much of their battle went on in courtrooms where the combatants were lawyers whose weapons were facts -- or at least, data -- and convoluted legal arguments that can, and do, make one's eyes glaze over. If you can get past the idea that you have to understand every twist and turn of the legalistic elements, then this is an enjoyable book.

Raviv points out that "for Ronald Perelman, Marvel became a platform for selling junk bonds. Apparently he did not appreciate that he was the custodian of a distinctive piece of American culture." A junk bond is a high-risk investment. This was what all Marvel's business decisions in the late 1980s to mid-1990s were based on. Perelman's inclination was to pay whatever price was asked for something he wanted, especially if he thought he could convert it to junk bond money. This was an important part of the deal he made to buy a large non-majority share of Perlmutter and Arad's Toy Biz toy company, the major licensee of Marvel action figures. Perelman needed the toy company in order to shore up lagging profits at his over-leveraged Marvel, and Toy Biz got a "perpetual no-fee license to design, market and distribute action figures, other toys and games based on all the Marvel characters." (And if you found the preceding a tad confusing -- don't worry about it. Oh, unless you owned Marvel stock.)

In any event, the Perelman organization's machinations left the company vulnerable to corporate raider Icahn to try to come in and take over. Perelman wouldn't let go without a fight. Both billionaires got their egos caught up in what was actually a pretty small change company for them, and Toy Biz was in danger of becoming a casualty of this battle of the titans. As one frustrated major investor in the companies wrote: "Egos have destroyed the market price of all the securities in this case. First it was Ronnie Perelman, then the Icahn-Fortgang-Perlmutter Mid-East peace talks with a new deal every other month, I have been in too many bankruptcy cases where professional pride got in the way of making a deal fair to all. The professionals still get their fees and go on to the next case."

Indeed, in Comic Wars, Perelman and Icahn act like comics speculators, each wanting to hold onto this mint condition collectible -- Marvel Comics itself --and determined that, if he can't have it, the other guy sure won't get it, either.

Real World Repercussions
As someone who was working at Marvel (I was running the Spider-Man editorial line) while all this was going on, and who resigned partly in response to many of the strange decisions that were handed down from higher, non-editorial corporate levels, I found it fascinating to read about what was causing many of the strange dicta that were handed down to us. While many of the Perelman organization's moves did indeed bring profit to the company and its employees, they were, even more than we then realized, short-term strategies designed to increase junk bond profits. When these deals and moves went sour, it gave Icahn, who had bought many of those junk bonds, a chance to move in. Part of his moving in was to squeeze Toy Biz out. The banks that were owed the debt Perelman had run up became the pivotal players. By convincing them to align with Toy Biz, Perlmutter and Arad became the owners of Marvel, which they remain to this day. Perelman didn't do too badly, either. Depending on how you calculate it, he made somewhere between $50 and $500 million dollars from his ownership of Marvel. The lawyers for the various parties made $30 million. Icahn? He came away with some stock in the newly merged Marvel/Toy Biz (now called Marvel Enterprises), but probably actually lost money in the deal. There's one scary footnote, though. According to Raviv, in July, 1998, "Icahn signed a 'standstill agreement,' promising for five years not to try to take over -- or take any action against -- Toy Biz or the new Marvel." That was over four years ago. One has to wonder if Carl has the date circled on his 2003 calendar.

Raviv makes an exciting, sometimes funny, sometimes tragic, story of all these shenanigans. At a certain point, unless you're really well versed in finance, you're going to lose track of a lot of the details. I'd recommend just reading these passages for as much meaning as you can and moving on. Raviv recaps often enough what's going on and its ultimate meaning so that you can follow the story.

Comic Wars: How Two Tycoons Battled Over the Marvel Comics Empire -- And Both Lost by Dan Raviv. New York, New York: Broadway Books, 2002. 306 pages. ISBN: 0-7697-0830-9 (US$24.95)

Danny Fingeroth was a writer and editor at Marvel Comics for 18 years. He ran the Spider-Man line during its highest sales years of all time. He went on to be editor-in-chief of Virtual Comics and head of development for Visionary Media. Currently, he's writing graphic novels for Platinum Studios, packaging Danny Fingeroth's Write Now Magazine for TwoMorrows Publishing and is writing Superman on the Couch: What Super Heroes Really Tell Us About Ourselves and Our Society for Continuum Publishing. Danny and his wife Varda just had twin boys, Ethan and Jacob. The twins are fine. The parents are proud. And sleep-deprived.