LIVE Disney Marvel Call

Disney is paying $4 billion for the rights to turn some 5,000 Marvel Comics characters into movies, theme parks and the like. Time to hear Bob Iger explain why that’s worthwhile.

Bob Iger, Disney CEO: Marvel doing a good job mining “rich intellectual property portfolio” to exploit lesser-known characters like Iron Man. We want to do more of that. Pixar deal three years ago shows that we can do this.

Mort Handel, Marvel chairman  (*not Marvel CEO Issac Perlmutter*): Thanks!

Tom Staggs, Disney CFO: Marvel’s existing licensing deals aren’t a problem for us. As they expire we can either bring in house or do more as third-party deals. We’ll be exploiting more lesser-known characters, expanding overseas. Deal will be dillutive, but we’ll be repurchasing shares over the next year. Expect deal to be accretive in two years, will be positive to EPS by 2012.

Q&A: Cost savings? Redundancies? Staggs: Not driving this deal. What will drives this is the opportunity for “synergies” over time?

What does this deal say about health of DVD market? Iger: As we’ve said, we think DVD market changing for reasons other than poor economy. But we think people are still buying discs that appeal to their kids, and that’s helped us. As we analyzed Marvel we factored in DVD concerns into equation. Marvel characters “aren’t bulletproof” but we think they’re better positioned than most.

How does deal impact existing deals with other studios (ie. Sony (SNE) has Spiderman)? Staggs: It doesn’t.

How revenue-driven synergy is there? Staggs: Won’t quantify them. But “we think they’re attractive, and they become more attractive over time.” Can you make more “Iron Man”-type characters that people who aren’t comic book nerds will come to like? That’s the plan.

Iger: Marvel has been great about figuring out which characters make most sense in the marketplace. Iron Man a great example. We don’t pretend to be experts at that, and we expect Marvel people to keep doing that for us. “We’re going to rely on them thoroughly”. As far as other studio deals for characters (again, see Spidey/Sony), no big deal.

Can you tell us where the big opportunities are, specifically? Iger: Disney XD channel already running 20 hours a  week of Marvel product, aimed at boys. We have been looking to licensing more Marvel characters in the future, and now we can do even more. International reach lets us expose characters to more people all over the world, in a way Marvel couldn’t do on its own. On video games, we may license and also self-distribute. Staggs: Marvel generates less than 50 percent of licensing revenue from international, we’re at more than 50 percent.

More on distribution deals – plans to get out of Paramount/Viacom (VIA) deal? Also, more 3D movies on the way? Iger: Whoever’s in charge of those movies will make the call on 3D. On Paramount deal: “Our intention obviously, is to respect the deal that’s in place”. Over time, we obviously want to be sole distributor of these films.

Can you “cross-pollinate” between Pixar and Marvel? Iger: We’ve talked about this internally. Pixar boss John Lasseter talked to the Marvel guys about this and they all got excited about it. We think there’s “ultimately some exciting product” that come of that. “Sparks will fly”!

[Sorry, missed next q]

When do Paramount, Sony, Fox deals expire? Won’t go into detail. Can’t really talk about it, especially since we don’t actually own Marvel yet.

Did anyone else bid on Marvel? Staggs: We reached out a few months ago (Iger to Perlmutter), and that’s what led to today’s announcement. [Translation: No.]

[Missed this q as well]

S&P’s awesomely named Tuna Amobi wants to know if Disney moving away from Disney-branded deals. Also, premium for Pixar was much lower than this deal. What’s up with that? Iger: We’ve been focusing on Disney brands because returns have been quite compelling. But we’re interested in brands in general, because we think high quality brands are increasingly important given choice. In this case, can not only build Marvel brand, but use Disney platform to help distribute and “create a greater Marvel presence”. “Goal is not to rebrand Marvel [as] Disney.” Staggs: I like to buy premium assets at bargain prices but that doesn’t happen very often. “This was not a deal that [Marvel] had to do”. Premium company, premium set of assets, have to pay fair price for that. “We do think it’s one of those classic win-win situations.” Tuna: OK, but what about Pixar deal? Staggs: Not talking about relative valuations.

[Apologies, missed last question as well]