Comic Book Urban Legends Revealed #169

This is the one-hundred and sixty-ninth in a series of examinations of comic book urban legends and whether they are true or false. Click here for an archive of the previous one-hundred and sixty-eight. Click here for a similar archive, only arranged by subject.

Let's begin!

COMIC URBAN LEGEND: Marvel sold all the copyrights to their characters to a separate company, Marvel Characters, Inc.

STATUS: False, with some chunks of True mixed in there

Reader Josh Dahl asked me the following a few weeks back:

[B]ack in the 90s when Marvel was "corporate raided", the guy that stripped them out sold off their assets. Like raiders do.

One of the things he did as Marvel was going bankrupt was to sell ALL of the character's copyrights to his own, different, company called "Marvel Characters Inc".

And since then, any time Marvel has wanted to use any of its own characters, they have had to pay "Marvel Characters Inc" for the right to do so.

Is that true?

Josh's question involves the sad story of Ronald Perelman's involvement with Marvel Comics.

Ronald Perelman purchased his first company in 1961, while still in college!! With monetary assistance from his father, Raymond (also a prominent businessman), Ronald purchased Esslinger Brewery for $800,000. He sold the company three years later for a $1 million dollar profit.

Perelman continued a very public career purchasing companies. Usually, when Perelman purchased a company, he would fire almost all of the management of the company, then he would try to sell off parts of the company to make it as lean as possible, then he would sell the company off (or keep it for himself). His most famous purchase (of a controlling share of the company) is the cosmetics corporation Revlon.

A few years after purchasing Revlon, Perelman turned his eyes to Marvel Comics, which had only recently been purchased by New World Entertainment. In 1989, Perelman purchased the company for a little more than $80 million dollars. Soon after purchasing the company, Perelman took it public with an initial public offering that raised $80 million dollars!

In an interesting nod of what to become the biggest part of Marvel's success, Perelman identified the strong position Marvel was in, with regards to their intellectual property. Perelman thought of Marvel like Disney - a company filled with strong intellectual property that could be exploited in a number of different areas.

To this end, Perelman purchased a number of other corporations to add to Marvel, including a card company. It also formed an exclusive agreement with the toy company, Toy Biz. Soon, Marvel was valued at over a billion dollars on the market.

This was during the early 1990s (the time of the speculator boom), and Marvel's value was most likely overinflated at the time.

To cash in on this valuation, Perelman sold almost $800 million in high-risk/high-yield bonds (these are usually called "junk bonds"). Now Marvel was DEEP into debt, and that coincided with the comic market crash of the mid-1990s, which was also the time of Marvel's ill-fated attempt to self-distribute their comics.

So times were extremely tough at Marvel. One of the owners of a significant portion of Marvel's bonds, Carl Icahn, fought Perelman for control of the company.

Marvel ultimately filed for bankruptcy in 1996.

Avi Arad and Isaac 'Ike' Perlmutter, owners of Toy Biz, sought to protect their company (and, most likely, they also saw an opportunity here) and while Icahn and Perelman went at it, they swooped in and raised the money to purchase Marvel Comics.

They then merged Marvel Comics with Toy Biz to form Marvel Entertainment, Inc.

No one really knows how much money Perelman made off of Marvel - he likely took in a lot of money, but when things went bad, he lost a lot of money, as well, so some market observers suggest that he could theoretically have made almost nothing, in the end, but I think it appears more likely that he did end up making a sizable chunk of money, just perhaps not as large as some people seem to think.

In any event, in their reorganization of Marvel after the merger, Arad and Perlmutter restructured the company by forming a number of holding companies for the various parts of the company.

One of those holding companies is the aforementioned Marvel Characters, Inc., which contains all the intellectual property rights of the Marvel characters. This company is the licensing wing of Marvel Comics. That is why it appears with regards to Marvel films, as that is where companies go to license the characters for the films.

Marvel Characters, Inc. is owned by Marvel Comics - it is not some big scam.

That said, Josh is basically correct in that Perelman, in many ways, DOES exhibit a number of the attributes of a corporate raider.

In this instance, though, there is no worries - Marvel Characters, Inc. is still part and parcel of Marvel Comics.

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