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Marvel’s earnings results; $10 mil investment in online


Frankly, we’re a little too bleary with joy over the idea of a US President who believes in habeas corpus to really think about things like Marvel’s financials, but they released a very interesting earnings reports yesterday, which showed that the IRON MAN film was, surprise, surprise, a boost to the bottom line:

Film production sales totalled $90.2 million in the third quarter, versus none in the prior year. Marvel credited the box office take of “Iron Man,” fees for serving as a producer for the film and for “The Incredible Hulk,” as well as foreign DVD pre-sales for ‘Iron Man,’ which was released on DVD on Sept. 30.

However, as quoted in the earnings call transcript, publishing was down for the second quarter in a row:

Operating margins within the publishing segment was 37%, in line with the expected range of full-year publishing segment operating margin of 37% to 40%. The year-over-year decrease in margin reflects higher spending related to our online initiative, which amounted to approximately $1 million in the quarter and lower custom publishing.

What’s that, you say? INVESTMENT IN ONLINE? Yeah, supposedly $10 Million In Digital Media; First Real Returns Expected In 2011:

Marvel’s investment in digital media, including digital publication of its comic books, is costing some profit on the publishing side, Peter Cuneo, vice chairman of the board, told analysts in today’s Q3 earnings call. According to the transcript (via Seeking Alpha), Cuneo answered a question about lower publishing growth by reminding: “Remember also that we are making a substantial investment in our digital publishing effort and we’ve noted in our press release today that the out-of-pocket in 2009 we anticipate will be around $6 million for that effort. So when you look at the publishing segment as a whole, you will see a decline in the profitability.” The company has invested $2.5 million to $3 million so far this year and plans to finish at $4 million. That would bring the total digital media investment for 2008-09 to about $10 million.

Asked to flesh out the digital initiatives, CFO Kenneth West added: “I would imagine that probably in the year 2011, we are going to see the first real positive contribution associated with digital media. That would be a combination of ad revenues, digital subscribers picking up on the subscription of comic books but not until that period, because we’ll continue to invest in that and it’s going to take some time and the dollars that we’ve built into our forecast.” He wouldn’t project the 2010 level of investment but said “we would anticipate the continuation of the digital investment for our future.”

Marvel is often chided for being cheap in things like comp copies and convention appearances, but obviously, they know the future lies online, and are backing it up with bucks.

Unsurprisingly, the Motley Fool still thinks Marvel is Christmas, Halloween, and Confirmation Day all rolled into one, although there are some bumpy roads ahead:

Economic headwinds also come into play. Vice Chairman Peter Cuneo called this year’s panic-cum-opportunity “unprecedented” and told analysts that “it’s very prudent for us to be cautious with our projections.” The low-end of Marvel’s 2009 guidance calls for a 10%-15% recessionary effect on every area of its business.

  1. Correct me if I’m wrong…

    …Didn’t Marvel state that single/floppy/monthly issue sales are up, but collected editions (TPB, Hardcovers, Omnibuses) are what are declining?

    Is this just a reprocussion of over saturation of different formats for the same material?

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