Marvel Comics – from bankruptcy to billions

The leader then, Ron Perelman, was a millionaire businessman with a variety of interests: in
1985, he’d made a huge deal for cosmetic firm, Revlon through his holding company,
MacAndrews & Forbes. In early 1989, Perelman spent $82.5 million on purchasing the
Marvel Entertainment Group, then owned by New World Pictures. Within 2 years, Marvel
was on the stock market and Perelman went on a spending spree: he bought shares in a
company called ToyBiz, snapped up a couple of trading card companies, Panini stickers, and
a distribution outfit, Heroes World. All told, those acquisitions cost Marvel a reported $700
million.

With Marvel’s record-breaking numbers and success, there came a series of bursting
financial bubbles and questionable business deals which led to a sharp collapse of Marvel’s
stocks. Shares which were almost $35.75 each in 1993 had tanked to $2.375 in just three
years. A company that grew through the 60’s, 70’s and 80’s because of their renowned
comics such as Fantastic Four and The Amazing Spider-Man had reached a peak by the
early 90’s. With some wrong business deals and ugly fights, the future of the company
seemed uncertain pushing them towards bankruptcy.

A speculation bubble in comics encouraged collectors to buy multiple editions and hoard
them up in the hope that they’ll one day be worth a fortune. Publishers were themselves
courting the collector market by introducing variant covers, sometimes with foil embossing
or other eye-catching, fancy printing techniques.

Perelman promised its investors that the franchise would expand their branding and sell
merchandise, such as stickers and action figures but that backfired and between, 1993-
1996, the rise of revenue coming from both comics and trading cards collapsed.

Due to the increasingly high cost of comics, fans started to stop buying the comics. Sales
dropped by 70% and Marvel in heavy debt, laid off 275 employees. So, what was the need of
the hour? What was it that Marvel needed to revive itself from such debts and bankruptcy?
Effective Leadership

On Dec 31, 2009, Disney finalized the purchase of Marvel Entertainment for $4.3 billion.
With that Marvel had a new CEO, Peter Cuneo. He was brought in by Isaac Perlmutter, a
power player in the toy industry whose company had just taken Marvel out of bankruptcy.
At one point in 2000 the company had only $3 million in the bank, barely enough to cover
its cash needs. Cuneo within 3 years turned Marvel around. He knew Marvel required both
short-term fixes to put cash in the bank and new strategies to generate long-term revenue.

Cuneo set up a strategy in place. He adopted a licensing model for all forms of media, such
as movies and television shows, and for consumer products such as clothing and school
supplies. He focused on the existing library of characters that were recognizable to the
public: Spiderman, the Incredible Hulk, Captain America, etc. It is much safer to revitalize
previously successful intellectual property than to assume the greater risk associated with
creating new content. They freed by the capital by licensing out the toy business for action
figures and role-playing games, which had previously been run internally.

The board decided that for the growth of the company, it was important to get their
characters, our brands, in front of the global general public, not just comic book fans.
Motion pictures and videogames are perhaps the two best vehicles for reaching the masses.
The strategy was to spread their Intellectual Property among a variety of Hollywood Studios.
They spent a huge deal on videogames as well. All this was done keeping in mind their most
authentic and conventional business of print publishing. They still avoided investing too
much in internet.

By 2002, the turnaround phase at Marvel was complete. The individual members of
Marvel's board were encouraged by Ike Perlmutter to be much more involved in the
business than merely attending quarterly meetings. These board members shared offices at
Marvel. They guided the company on a weekly basis, regularly interacting with senior
management in person. It was again a successful profit-making company, loved by millions.  

The above case study talks about how ineffective leadership can be so dangerous while
effective leadership and strategy can be so useful.

TASK

1. IDENTIFY in detail the factors that revived Marvel with respect to leadership. Talk
about the leadership styles and traits used in the process of revival. You could use
the 7S Framework of McKinsey.
2. EXAMINE the development of leadership under Peter Cuneo. You could also use the
Pendleton’s Primary Color Model.
3. Pick any one change in today’s business world, and STRATEGISE as an HR manager of
Marvel, how you would like to bring that change in your organization. Use any
change management model to do so.

Sources :

https://www.forbes.com/2010/02/01/peter-cuneo-marvel-leadership-managing-
turnaround.html?sh=583b18e66fa1
https://www.finnovationz.com/blog/the-journey-of-marvel-studios-bankruptcy-converted-
in-billions

https://www.denofgeek.com/movies/how-marvel-went-from-bankruptcy-to-billions/
#:~:text=A%20battle%20in%20the%20boardroom,after%20years%20of%20legal
%20disputes.