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Wednesday, October 15, 2008 

Fortune exaggerates Marvel's publishing sales

Fortune magazine writes a sugar-article about Marvel's successes in films, but exaggerates when it comes to their "old-fashioned publishing."
Marvel offers the only real glimpse at the economics of big-time comics publishing, because it and its main rival DC Comics together roughly split close to 80% of the market in new comic book sales. However, DC is a division of Warner Brothers (which, like Fortune and CNN, is owned by Time Warner), and you can find little mention of its financial performance within the media giant's releases, although its brands are going strong thanks in part to films like "The Dark Knight" and its upcoming "Watchmen." (A quick primer: Marvel publishes Spider-Man, X-Men, Hulk and Iron Man, while DC is the home of Superman and Batman).

Maisel acknowledged that much of the buzz on his company has been on its emergence as a film studio and the growth of its largest business: licensing its characters for toys, video games and theme parks. But he himself marveled (pun intended) at the enduring health of the publishing business, given that the distribution of comic books has been "artificially constrained" by the need for fans to largely find their way to comics stores. The upside of that scarcity, he added, is that "it sort of created a cult around comics: People felt like they were a part of a social group. When I was a kid, being a geek was being a geek. Now being a geek is cool."
Not really. Not when you realize that your favorite hobby could die out one day with very few new people coming in to read comics as well. And health of the publishing endures? When it's barely - and now even rarely - more than 100,000 copies sold of any comic, in contrast to the millions sold years before for the same books, it's not what can be called healthy.
In the quarter ended June 30, publishing accounted for $32 million of Marvel's $157 million in revenues, and $11.7 million of its $85.2 million in operating profit. (The bulk of the rest came from licensing - which generates even higher margins of more than 80% - since the spoils from "Iron Man" won't show up until the next couple of quarterly results.) Although its publishing revenue and profits declined in the first half of the year, the company has given guidance that it expects revenue growth in publishing between 3% and 7% for the year, and margins between 37% and 40%.

Maisel declined to specify to what extent his hit movies drive comic book sales, but it seems a stretch to suggest that cinematic success alone can take the credit. Neither is there much of a digital play at this point. Still, like DC, Marvel has been talking up the digital potential of its characters -- particularly, in Marvel's case, as far as putting its catalog - 70 years of stories featuring some 5,000 characters - online for fans to read.
No clear sales figures? Then the talk of big publishing business is unconvincing, and $32 million in publishing does not seem like much compared to other businesses. They expect more growth in revenue? I think they're just trying to keep a straight face, when in reality, it's just not working well.

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