by Marco Fiori

Created on: September 04, 2009   Last Updated: September 15, 2009

With the global recession still biting hard, DisneyTM (DIS), the entertainment juggernaut, has managed to show that there are green shoots in the global economy. Backed by the recent revival of the worldwide stock markets, the $4 billion purchase of Marvel EntertainmentTM (MVL) has astonished financial experts. Have DisneyTM managed to complete one of the shrewdest deals in the history of the entertainment industry?

It was only at the end of July that DisneyTM had reported that their profits had fallen by 26%. So why the shock purchase of rivals, Marvel EntertainmentTM? DisneyTM put the acquisition down to brand management. They will see over 5000 characters join the DisneyTM family, which as a result increases their fan base causing their profits to potentially shoot skyward.

The takeover can only be a good thing. DisneyTM is already hugely popular with young audiences and of late, with teenage girls. Their past purchase of Pixar has meant their family-centred films have been unaffected with the transfer to digital technology. DisneyTM will always bring in healthy profits, but the inclusion of Marvel'sTM intellectual properties means that the elusive teenage male demographic will hopefully be cracked.

With the iconic characters that the MarvelTM brand carries, and the merchandising / movie popularity that accompany it, it is nave to suggest that DisneyTM will suffer. The only people who will be worried are Disney'sTM competitors - that is a limited selection of companies as it is.

HasbroTM (HAS), who recently branched out from manufacturing toys to film with G.I. Joe will obviously feel threatened while Dreamworks AnimationTM (DWA), Disney'sTM major digital animation rival will be watching their stock price nervously. It is bad news for maintaining a healthy, competitive market, but DisneyTM will clearly deny that.

After all, on the announcement of the takeover, Disney'sTM president and chief executive was only too pleased to maintain that, "We believe that adding Marvel to Disney's unique portfolio of brands provides significant opportunities for long-term growth and value creation."

He is exactly right - we may not see an instantaneous change in the way in which the [two] company[s] is [are] viewed, but over a five year period, with the recession receding and consumer spending on the rise it will hopefully be a well thought out deal. It can only mean a bright future for DisneyTM as they get to grips with the vast catalogue of characters / brands they have managed to acquire.

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