The State of Marvel 1996

Originally published December 13, 1996, in Comics Buyer’s Guide #1204

It’s tough to keep up with the current situation regarding Marvel Comics. Whatever I write at the moment becomes overshadowed by new outrages.

There’s horror for everyone. For shareholders who see Marvel only as an investment, there’s the fiscal bottom line. Who would have thought that the term “Negative Zone” would apply to the price of Marvel’s stock? For fans of 30 years or more who remember things like “Bullpen Bulletins” fondly, guess what! The Bullpen is pretty much gone, gutted in the most recent round of firings.

I am, at present, surrounded by news articles describing Marvel’s current state of affairs. I love seeing various writers stating that “the other shoe has dropped.” These people have clearly not been paying attention. An explosion at the home of Imelda Marcos wouldn’t have yielded the number of flying shoes that currently is raining down in the Marvel empire. One looks at the financial situation ever since the company was taken over by Ron Perelman, and one finds oneself saying, “This guy is a multimillionaire?” If we judge only by the performance of Marvel under his care and feeding, it makes you wonder how he could possibly mount a successful paper route, much less a financial empire.

The problem is, in trying to (with deference to the Borg) assimilate all this info, I have to admit that I’m in a bit over my head. Writers try to be jacks-of-all-trades, but I’m not a financial analyst. I’m not entirely sure exactly what it is that Perelman is trying to do to salvage this mess. It’s been explained to me, and I understand it at the time that it’s explained, but beyond that I get a bit confused, and I’m certainly not qualified to try and tell you. Sales, I know. Distribution, I’m fine. Mergers and acquisitions, leveraged buy outs, I’m in trouble. I could barely decipher the climax of Trading Places when Eddie Murphy and Dan Aykroyd were cornering the market on orange juice.

I’m reminded of the Barrons article which ran back in 1992; it recommended for all sorts of reasons that stockholders steer clear of Marvel Comics. The problem was that none of the reasons were remotely accurate. They were based entirely on misinformation (wrong cover prices, statements that mis-solicited books were not returnable) and incorrect speculation (that the animation and toy line impetus would dissipate; instead they’ve grown and have become the tail wagging the dog).

However, as it has turned out, the article was right. Just for all the wrong reasons. After all, it was only after the article ran that Marvel made the series of mistakes which led to the current fiasco.

Because the new Marvel hierarchy came into the comics business with an utter lack of knowledge as to the dynamics of our little industry. Worse, they couldn’t have cared less. Executives boasted in interviews that, because they had no sense of history, they could make decisions that were not tied to the past. Of course, in the past, Marvel was a success, but that apparently didn’t occur to them. Instead they ballyhooed their unfamiliarity, embraced it and caressed it like a lover. Ignorance was more than bliss. Paraphrasing Gordon Gekko (Michael Douglas) in Wall Street, as far as the Marvel brain trust was concerned, ignorance was good. And while we’re at it, bad is good, up is down, wrong is right, and everything old is in Mylar snugs.

You see, if they had paid attention to history, they’d have noticed that the comics industry was in extremely bad shape about fifteen years ago. The relatively low profit margin and high maintenance of comics had made them extremely undesirable to the IDs (Independent Distributors), who gave them little to no attention in the average magazine and mom-and-pop stores.

It was the advent of Phil Seuling and the direct market that pretty much saved the comics industry. Suddenly comic books became high profit items for the publishers because they could print exactly what was needed and sell it all. The IDs reacted with tremendous anger to this new, upstart form of distribution, but people such as Marvel’s circulation head, Ed Shukin, warded them off, like Van Helsing waving back Dracula with a crucifix.

The direct market and the comic industry were in a delicate balance, one thing leaning upon another.

But Marvel was not beloved within the industry. It was the largest, which gave it incredible control and power. And it doesn’t matter whether one is benevolent or not; if one has power and control, one is always going to be regarded with suspicion because power tends to corrupt.

Distributors always had chips on their shoulders, daring Marvel to fulfill their greatest fear and cut out the middle man by selling directly to retailers. Retailers always had chips on their shoulders, daring Marvel to fulfill their greatest fear and cut out the middle man by selling directly to the readers. Readers always had chips on their shoulders, daring Marvel to produce something that they actually wanted to buy, rather than something they felt they had to buy.

Even Marvel’s positive deeds came back to bite them. Their royalty plans put hundreds of thousands, perhaps millions, of dollars into the pockets of key creative personnel—who then turned around and formed their own company. The creation of Image was one of the two major death knells for Marvel, in that Image accomplished two things:

First, it showed that it was possible to compete head to head with Marvel. In doing so, a lot of the underlying fear that the industry felt for the company began to erode. And when fear evaporates, that leaves anger and hostility with no dampers to hold it back.

And second, Image tied up retailer dollars by taking orders for books that didn’t ship, thereby depriving both retailers and Marvel of income.

If Marvel had only waited matters out, they could have looked golden. But Ron Perelman—like the old song, “Do Do Ron Ron”—felt that he had to Do Do something. With the unbridled industry hostility sweeping over Marvel like acid rain, and market share eroding, Perelman the slash-and-burn control freak decided that Marvel had to take control of its destiny.

Which it did. Which means, ultimately, that they’ve no one to blame but themselves as the second death knell chimed.

Basic physics: For every action there is an equal and opposite reaction. In the world of comic books, it just takes a while. For example, the creation of The Fantastic Four was spectacular. But when something extremely good happens, something extremely bad has to occur in order to balance it out (which would explain Team America.) In this instance, if we take the creation of the direct market as an exceptionally good idea, then it was only a matter of time before an exceptionally bad idea cropped up to balance it out.

And that was the decision to self-distribute through Heroes World.

It was massively stupid and wrong-headed in its inception. Everybody knew it. Everybody—with the sole exception of those who were actually making the decision. Proudly devoid of loyalty, history and common sense, Marvel went to the already crippled retailer base and turned loose termites on the crutches. Lower discounts, higher shipping costs, and a previously regional distributor who was being asked to gear up, overnight, to become a national outlet.

In the old days, when distributors would voice suspicion to Carol Kalish or myself that Marvel would self-distribute, we would dismiss the idea as ludicrous. We would say that Marvel wasn’t set up for that. That Marvel would need regional warehouses. That Marvel would need a huge staff to deal with thousands of retailers. None of these things did Marvel have, and what Marvel didn’t need was the tsuris that such a situation would create.

But Ron Perelman didn’t care. Mr. History Lesson knew all he needed to know, and heaven save us from those who know all they need to know. The comic book industry has always been cyclical, with highs and lows in its sales. With a spectacular high point having arrived, a spectacular low point was inevitable. And when it arrived, it sent the Marvel brain trust into panic mode, stupid decisions were made, and now Marvel is hemorrhaging money, sales and trust.

In a desperate attempt to rewrite history, Marvel turned around and gave key Image personnel carte blanche over major characters. Too little, too late, particularly if Marvel was hoping to reacquire the glory days of a million or more copies sold. A couple of hundred thousand, yes, but that doesn’t make up for the disastrous slippage and panicky stockholders.

Morale has never been lower at Marvel. Why? Because Ron Perelman has made it clear that he trusts no one—a not atypical trait in someone who knows that he himself cannot be trusted. He did not trust the distributors, and so took it upon himself to do it himself. He did not trust the current editorial line-up and creators, and so took away some of Marvel’s greatest characters and “outsourced” them—a move that many have perceived as having ramifications far beyond a mere desperation measure to jack up sales. As the old joke goes, he’s a self-made man, which shows you the dangers of unskilled labor.

If Perelman cut the line back to about 10 titles and outsourced everything, he could absorb accounting and legal needs into already existing arms of his businesses and shut down the entire office. Can he be trusted not to do that? No. Can he be expected not to do that? No. At this rate, unless something turns around very quickly, nothing will be left of Marvel but scorched earth. Which would be disastrous across the board.

After all, Marvel the publishing entity may only account for 15% of Marvel’s income, but it’s 30% of the market. If Marvel Comics ceases to exist, the already beleaguered retailer base takes a major hit. More and more comics shops close.

If enough comics shops close, Diamond goes belly up. If Diamond goes, DC will have to move with lightning speed to distribute through Warners—and it might not be able to move quickly enough.

As for the independents, well—there’s talk of the indies forming their own group distribution arm. I think it’s a good idea. And they’d better talk fast.

What would be an interesting development would be if Time Warner purchased Marvel. This isn’t to say that I have inside information; I don’t. I’m just speculating that it would be a good match.

From the showbiz end, Marvel has any number of characters who would be good fodder for movies and television series, and Time Warner has the resources to produce something that Marvel’s never had: a movie that doesn’t stink on ice. From the publishing side, the Marvel and DC universes could continue to cross over, to mutual benefit. Hëll, most of the top editors at DC used to be at Marvel, anyway.

Besides, if Marvel was the one who drove the stake into the heart of the direct market—let’s be honest—DC, in going exclusive with Diamond, cut off the head. DC bears some responsibility in this mess, and, if Time Warner saved Marvel, it would help mitigate some of its own actions.

The industry teeters on the edge of the abyss, folks, and someone is going to have to take swift action to drag it back. And I have a sneaking suspicion it’s not going to be Do Do Ron Ron Perelman, because Do Do Ron Ron took a publishing giant and turned it into—well—Do Do.

(Peter David, writer of stuff, can be written to at Second Age, Inc., P.O. Box 239, Bayport, NY 11705.)