Entertainment Is A Serious Business

For this column, I’m going to ask that you hold on to your suspension of disbelief, because I’m going to talk about comic books.  Not only am I going to talk about them, but I’m going to talk about whether or not to invest in the stocks of the Big Two – Marvel and DC.  I’ll also cover two other companies that have been impacted by comic books.

Incredible Iron: Marvel Comics’ Big Year

Most of the summer blockbusters this month have been comic book related.  “Iron Man” swept theaters, the “Incredible Hulk” movie made an impressive showing, and then came the Dark Knight, which easily dominated the box offices from its release. Even the new Angelina Jolie movie, “Wanted,” is based off a comic book series.

If there’s anything more surprising than the glut of comic book movies, it’s how well they’ve been received. From May 2 to Aug 6, a comic book movie was the top grosser for six out of the 13 weeks, and at least one comic book movie was one of the top ten grossers each week!

This shouldn’t be too surprising.  The original Superman movie with Christopher Reeve was well received, and Tim Burton’s “Batman” was successful enough to spawn three sequels.  Most recently, the new Spider-Man films have kicked off a spate of Marvel-based superheroes, including Daredevil, Punisher, and the 2004 “Hulk” film.

With “Iron Man” and “Incredible Hulk,” though, Marvel comics has taken an active hand in creating these movies, going so far as to create their own movie studio, and make movies with other studios as an equal partner. This has resulted in two movies that stay remarkably close to the comic books, which has drawn the approval of comic book fans, critics, and the average moviegoer. It should be unsurprising that staying close to the source material of popular fiction should prove profitable, but if you look back on “Batman Forever,” “Batman and Robin” and the 1989 “Punisher” film, you’ll see it’s not always the case.

Both “Iron Man” and “Incredible Hulk” have caused Marvel’s stock to rise, making an already healthy stock impressive. Since its price of $25 at the beginning of 2008, Marvel stock now sits at a comfortable $35.26. This is even more impressive when you consider that one of their movies is a remake of a property that was made into a movie four years ago. Marvel plans to make more movies with their new studio, and based on their track record so far, this can only help the company. If you haven’t taken this stock seriously yet, you should.

Bring On The Bat

DC Comics, on the other hand, has Batman, who is a big-screen superhero favorite—when done right.  If “Iron Man” and “Incredible Hulk” were textbook examples of how to do a comic book movie right, then “Batman Forever” and “Batman and Robin” were textbook examples of how to drive fans away in droves.
DC and Warner Brothers apparently learned their lesson, taking Batman back to his grittier roots in “Batman Begins,” and continuing the trend with “The Dark Knight,” which showcases the psychological makeup of the characters as much as it does the special effects. With “The Dark Knight,” Warner Brothers has a bona fide hit on its hands.

The problem is that, unlike Marvel, DC Comics and Time-Warner’s stock are less affected by a good movie than the smaller Marvel.  The new Batman movie may be responsible for the slight jump in Time-Warner stock from $13.78 to $14.23, but Time-Warner has fallen on some hard times.  By comparison, their stock was around $21 per share in July 2007.

However, Time-Warner doesn’t seem to be following in Marvel’s footsteps.  After “The Dark Knight,” they should be capitalizing on their stock of superheroes, which include such icons as Wonder Woman, the Flash and Green Lantern. They should also dedicate a portion of Warner Brothers studios to developing these heroes, much like Marvel has. It wouldn’t necessarily elevate their stock significantly, but based on the string of successes Marvel’s had it would be a wise way to exploit their property.

Other Geek Financial Trends

The success of Marvel movies seems to have spilled over into another area—toys. Hasbro has had a good year, seeing its stock rise from $22.83 to $38.05 since January. This is due in no small part to its toy lines based on the Iron Man and Hulk properties. Given the success of these movies, Hasbro has managed to jump on the comic book gravy train, and they will likely get the toy license to Marvel’s future movies, too.  In the meantime, Hasbro has also released a new line of Star Wars toys based on the computer-generated “Clone Wars” movie, as well as a new Transformers line.  Their future is looking bright, but potential investors should wait a month or two to see if their stock can maintain its current high.

Investors may also want to look at Disney, who has signed a deal with newly-created Kingdom Comics, a comic book company created to re-imagine live-action Disney movies and create graphic novels, which Disney may opt to turn into movies. Of course, Disney Publishing Worldwide gets the first chance to distribute Kingdom Comics’ publications. Disney has had some success with comic books in the past, and this new venture is likely to generate some unique Disney projects. Since Disney is a company that relies on a constant influx of new ideas for its movies, this may strengthen the company’s current price of $31.31. It’s another stock worth watching.

Chris Gottschalk
Analyst, Bourbon & Bayonets