Marvel Entertainment Group
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Case: Marvel Entertainment Group
Corporate Finance
1 Marvel’s bankruptcy
In December 1996, Marvel Entertainment Group and the three holding companies entered bankruptcy. Why did they file for it and why were the problems caused; bad luck, bad strategy or bad execution? And did Perelman’s pre 1997 decisions contributed to Marvel’s downfall?
In our opinion, the bankruptcy of Marvel was caused by a variation of problems. These problems can be divided into issues in the overall industry (bad luck) and the negligence of Perelman himself (bad strategy).
In general, the whole comic book industry shrunk, because of the rise of other forms of entertainment, such as video and computer games. The trading card market turned bad as well, because of strikes in the baseball and hockey leagues. These events could not have been foreseen, although the rise of the electronic entertainment could have been anticipated. The key was to swiftly adjust to these turn of events and that is where the business strategy comes in.
Some of Perelman’s pre decisions contributed to the downfall of Marvel as well.
First of all, Perelman failed to recognize the competition of other forms of entertainment and despite all the problems, Perelman continued to build up the entertainment company. Perelman ignored the market shifts and the boom of new technologies. Perelman focused on “old-fashioned” hobbies like trading cards or action figures of Marvel heroes. The aspect of a well diversified company does not hold under a certain perspective: If Perelman adjusts other business lines to Marvel products it is not surprising that the major business lines of the whole company go down in bad times. Moreover, Perelman decided to distribute exclusively to specialty stores, because these sales are final, which generated higher margins.
Additionally, Perelman destroyed the collector’s passion and the
Case: Marvel Entertainment Group
Corporate Finance
1 Marvel’s bankruptcy
In December 1996, Marvel Entertainment Group and the three holding companies entered bankruptcy. Why did they file for it and why were the problems caused; bad luck, bad strategy or bad execution? And did Perelman’s pre 1997 decisions contributed to Marvel’s downfall?
In our opinion, the bankruptcy of Marvel was caused by a variation of problems. These problems can be divided into issues in the overall industry (bad luck) and the negligence of Perelman himself (bad strategy).
In general, the whole comic book industry shrunk, because of the rise of other forms of entertainment, such as video and computer games. The trading card market turned bad as well, because of strikes in the baseball and hockey leagues. These events could not have been foreseen, although the rise of the electronic entertainment could have been anticipated. The key was to swiftly adjust to these turn of events and that is where the business strategy comes in.
Some of Perelman’s pre decisions contributed to the downfall of Marvel as well.
First of all, Perelman failed to recognize the competition of other forms of entertainment and despite all the problems, Perelman continued to build up the entertainment company. Perelman ignored the market shifts and the boom of new technologies. Perelman focused on “old-fashioned” hobbies like trading cards or action figures of Marvel heroes. The aspect of a well diversified company does not hold under a certain perspective: If Perelman adjusts other business lines to Marvel products it is not surprising that the major business lines of the whole company go down in bad times. Moreover, Perelman decided to distribute exclusively to specialty stores, because these sales are final, which generated higher margins.
Additionally, Perelman destroyed the collector’s passion and the
References: By the Associated Press. Marvel Shareholders Approve Takeover. New York Times. December 31, 2009. Retrieved from http://www.nytimes.com/2010/01/01/business/01disney.html CBC News. Lawsuit against Stan Lee, Marvel dismissed. April 5, 2010. Retrieved from http://www.cbc.ca/arts/books/story/2010/04/05/shareholders-lee-marvel.html Forbes.com. Isaac Perlmutter. Retrieved from http://people.forbes.com/profile/isaac-perlmutter/51424 Leonard, Devin. Calling all superheroes. Fortune. May 23, 2007. Retrieved from http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/28/100034246/index.htm Norris, Floyd. Icahn-Led Bondholders Take Control of Marvel From Perelman. New York Times. June 21, 1997. Retrieved from http://www.nytimes.com/1997/06/21/business/icahn-led-bondholders-take-control-of-marvel-from-perelman.html