marvel comics turnaround - Turnaround Management Association

Marvel Comics Turnaround Team 2
Good Decisions
First, Marvel’s management team wisely divested several unprofitable and inactive entities, the
most important of which were:
• Heroes World Distribution, Inc. – the exclusive, wholly owned distributor of Marvel’s
comic books, which had become unprofitable over the years as comic book demand fell. In
its place, Marvel’s management established a contractual relationship with an alternative
distributor with more favorable financial terms.
• Fleer Confections – the candy arm of the trading card company was sold at a loss over
1997 and 1998, which resulted in a decrease of $7.1M in revenues.
• Unprofitable children’s magazines, which resulted in a decrease of $15M in revenues.
Next, Marvel’s management cut operating costs by 17 :
• Laying off 300 people, most of whom were highly compensated people, administrative
personnel, and editorial staff.
• Reducing SG&A by $55.4 million ($183M to $127M) from restructuring the comics,
distribution, trading cards and confections divisions of the company.
• Reducing depreciation expenses from $16M to $11M as result of write-downs of fixed
assets associated with the sale of unprofitable business units.
• Renegotiated expensive artist contracts.
Finally, while doing this, management kept as much of the business going as possible:
• It maintained its comic book, licensing and toy businesses.
17 From Marvel Enterprises, Inc. annual reports on Form 10-K for years 1997-1998, MD&A Section
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