Marvel's Misery


How Two Tycoons Battled Over

the Marvel Comics Empire--And Both Lost

By Dan Raviv

Broadway Books, 305pp, $24.95

When Marvel Entertainment Group filed for Chapter 11 bankruptcy in 1996, fans held their breath, wondering what would happen to the outfit that had given birth to such icons as Captain America, Spider-Man, and the Incredible Hulk. Few could have imagined that what would follow would have more twists and turns than any X-Men plot. Dan Raviv's Comic Wars tries to tell this tortuous tale but gets bogged down in the legalities.

In 1989, financier Ronald O. Perelman bought Marvel Entertainment Group from New World Entertainment for $82.5 million, putting up $10.5 million of his own money and borrowing the rest. His timing couldn't have been better: The first Batman movie had just been released, and a comic-book-collecting mania was gathering steam. Perelman spent the next few years dressing up Marvel before selling a piece of it in an initial public offering that raised $82 million, the bulk of that going to pay down debt and the rest going to one of Perelman's many holding companies. Then, he went on a debt-fueled buying spree, patching together trading-card companies, a sticker outfit, and a controlling interest in a toy company.

But Perelman's lucky streak ran out: Trading cards tanked, the sticker craze came unglued, and comics as collectibles sank under a supply glut. Soon, Marvel was choking on its debt load. Its stock, which had soared more than tenfold from 1991 to 1993, fell into a swoon, as did its high-yield bonds. The banks, owed hundreds of millions, began to sweat. Finally, in 1996 Marvel missed an interest payment, putting it technically in default.

Perelman, who was in no danger financially, came up with a convoluted scheme in which he would "rescue" Marvel by merging it with Toy Biz, a profitable maker of action figures in which he held a controlling interest. All he asked in return was 400 million shares, or 80%, of a recapitalized Marvel. His cost per share came to 85 cents, at a time when Marvel shares were about $3. Understandably, existing shareholders went ballistic, as did the junk-bond holders.

Enter Carl Icahn, corporate predator extraordinaire, who had bought up the junk bonds, which were backed by Perelman's controlling shares in Marvel. Icahn forced Marvel into bankruptcy to seize the stock, resulting in legal proceedings so messy that it's nearly impossible to separate the players, their interests, and their ultimate goals.

While this is a complicated story, filled with warring parties and competing claims, it's one that Raviv, a correspondent for CBS News and co-author of books on Middle East espionage, should be up to telling. But this book feels rushed: Raviv seems to have spoken with neither Icahn nor Perelman, relying instead on court documents and articles. And except for a token appearance by Stan Lee from Marvel's golden age, there are no heroes, just a chorus of lawyers. So if your idea of fun is to sit down with a stack of legal briefs, Comic Wars should provide hours of entertainment. Personally, I'd prefer back issues of Spider-Man.

By Robert J. Rosenberg

Before it's here, it's on the Bloomberg Terminal.