Comic Wars How Two Tycoons Battled over the Marvel Comics Empire--And Both Lost

1 "Meet Dr. Doom!" Ronald O. Perelman--America's richest short, bald, forty-six-year-old chain-cigar-chomper--seemed to have a delicious deal when he bought Marvel Entertainment Group in January 1989. This was not a hostile takeover. It was simply a matter of negotiating a fair price for a property that seemed to have untapped potential. The owner dumping Marvel was New World Entertainment, a Hollywood production company that garnered very limited payoffs from made-for-television movies featuring the Incredible Hulk and other Marvel comics superheroes. New World had gone flat and wanted to pump itself up with new genres of TV and movies. So Marvel was on the auction block, and when Perelman saw that half a dozen companies were making bids he hardly needed to check his credit line. He simply outbid the others at $82.5 million. The delicious part was what Wall Street calls leverage: He had to put up only a small percentage of the money. All the rest was somebody else's. MacAndrews & Forbes, the shell company owned personally and wholly by Perelman, cut a check for just $10 million. More than $70 million was borrowed from a syndicate of banks, led--as was becoming standard for Perelman--by Chase Manhattan. Chase would handle all the paperwork and formally make the loan offer while recruiting other banks to take on portions of the risk. But what could be so risky here? Chase and the others were happy to finance Perelman's Marvel acquisition. This was small change compared with the billions of dollars of business that this tycoon represented in his recent past and his likely future. So far he had displayed a terrific eye for spotting undervalued companies, taking them over, giving them new management, and often breaking them up so that the pieces could be sold for an easy profit. That is what corporate raiders do for a living. Perelman told his bankers--the "secured lenders," in the parlance of mergers and acquisitions--that owning Marvel would be "fun." Chase Manhattan did not lend money for laughs, but his idea of a good time seemed sound enough. Some in the business community had seen the needlepoint message in the ground-floor conference room of the Townhouse. Beneath the huge, framed paintings by Roy Lichtenstein and Andy Warhol was one pillow with stitching that read: "Love Me, Love My Cigar." Another had this motto: "Happiness Is a Positive Cash Flow." What banker could disagree? Perelman said that he would take Marvel far beyond the sleepy and small business of publishing comic books. "It is a mini-Disney in terms of intellectual property," he said. "Disney's got much more highly recognized characters and softer characters, whereas our characters are termed action heroes. But at Marvel we are now in the business of the creation and marketing of characters." Perelman never claimed to have a clear blueprint for this kind of expansion. And the bankers had no earthly idea how much more they would be lending him in the six years to follow. Chase Manhattan and the other banks treated Ron Perelman as the wizard he appeared to be, and they enjoyed a constant stream of fee-generating transactions with him. When they loaned money to Perelman's companies, the banks were "secured"--first in line to be repaid should the debtor go bankrupt. Bankruptcy was not, however, a word even remotely in the lexicon when discussing Perelman's early years at Marvel. True, the comic book characters had not been fully exploited by New World. But the books were selling to a core of loyal fans, and the beginnings of a collectibles craze could be detected as the 1990s got under way. Perelman also felt he had the perfect man to lead Marvel into a wider world of entertainment: the tall, blue-eyed, and articulate Bill Bevins, former chief financial officer of Ted Turner's broadcasting empire iRaviv, Dan is the author of 'Comic Wars How Two Tycoons Battled over the Marvel Comics Empire--And Both Lost' with ISBN 9780767908306 and ISBN 0767908309.