Smash! Pow! Bam!

Why superheroes go bankrupt

Mega-investor Ron Perelman has all the traits of a comic book supervillain. He's massively wealthy and powerful. More to the point, he exudes enough vanity and overreach to make Lex Luthor and Dr. Doom seem like a couple of Girl Scouts. So it's not surprising to see Perelman slugging it out with rival billionaire corporate raider Carl Icahn on the cover of Comic Wars: How Two Tycoons Battled Over the Marvel Comics Empire…And Both Lost!!! (Broadway Books). As described by journalist Dan Raviv, the board room brouhaha between Perelman and Icahn isn't just the most entertaining battle royale since Superman and Muhammad Ali punched each other's lights out in a late-'70s comic. It's a cautionary tale about mismanaging intellectual property.

In 1989 Perelman, best known as head honcho at the cosmetics company Revlon, surprised the investment world by outbidding a number of rivals to buy Marvel. Perelman spoke of the comics publisher as a "mini Disney in terms of intellectual property" and promised to take the company to that vaunted stage of corporate nirvana, the next level. Perelman boasted that there would be more merchandising, more glitz, and—at long last!—good movies based on Marvel's rich stable of characters: Spider-Man, the Incredible Hulk, the Uncanny X-Men, and Daredevil.

For a few years, Perelman was invincible. The early '90s saw a collectibles boom that lifted comic book sales. Foil-embossed covers, multiple covers for the same issue, and issues shrink-wrapped with giveaways encouraged folks to buy several copies and wait for the price to rise. The boost in comics' value helped bring about new respect for the oft-maligned genre. "The Wizard"—Raviv's sobriquet for Perelman—branched out, purchasing baseball card and sticker companies.

Then the 1994 baseball strike nearly erased the value of Marvel's card and sticker divisions. Even worse, the speculative bubble in comic books burst, shocking the whole industry and pushing Marvel into bankruptcy. It also revealed how little Perelman really understood the comic book industry.

For much of the century, comics had traditionally been sold in drugstores and newsstands. But by the '90s the overwhelming majority of sales were though small-time comic specialty shops, which were serviced by over a dozen distributors. This system was inefficient from the publishers' perspective, but it provided options for storeowners living on slim profit margins. The competition benefited them, and they could often switch from distributor A to B when their tabs got too big.

One way Marvel tried to cut its losses in the '90s was by directly distributing its own comics. That move not only ran several distributors out of business, it also shuttered many comic book shops and did real damage to overall sales. The company's hamfistedness earned it the enmity of many fans, who undertook a boycott of all things Marvel.

It wasn't just business tactics that bothered fans. Marvel's often hostile approach to its creative talent undercut quality and led to the exodus of its most popular artists, who formed Image Comics in 1992. And despite his bluster, Perelman never seriously tried to deliver movies based on Marvel characters—he didn't trust "Hollywood accounting."

In Raviv's telling, Perelman is a remarkably unperceptive man who never understood exactly what he was buying or what to do with it. Yet Perelman's comparison of Marvel to Disney has turned out to be more apt than he knew. Though a nearly unparalleled entertainment powerhouse today, Disney went through years so lean in the '70s and '80s that its imminent demise was taken for granted. It was only with the massive success of The Little Mermaid (1989) that Disney rejuvenated its film division and fully reversed its long-slumping fortunes.

The lesson from Disney's experience? It is no easy matter to develop and retain talent, to properly package creative content, and to effectively deliver it to audiences—all while turning a buck.

That's a lesson that the new owners of Marvel, Ike Perlemutter and Avi Arad, seem to have learned. While its comic book sales continue to putter along, Marvel has scored critical and commercial successes with films such as 2000's X-Men and this year's Spider-Man. 2003 promises more of the same, with A-list director Ang Lee putting out The Hulk, Hollywood heartthrob Ben Affleck donning red tights to play Daredevil, and an X-Men sequel hitting theaters.

And in a hidden lair somewhere, no doubt, Ron "The Wizard" Perelman plots his revenge.