Disney CEO Factored Concerns About DVD Sales Into Marvel Buy

Walt Disney Co. (DIS) Chief Executive Robert Iger said Monday that Marvel Entertainment Inc. (MVL) was an attractive acquisition for the company despite the challenges facing the film business.

While box office receipts have remained strong during the recession, as movies remain a popular form of entertainment for consumers even as they cut back on spending, DVD sales - Hollywood's largest source of profitability - have declined sharply.

For his part, Iger has said previously that he views DVD sales as a business in permanent decline as consumers turn to digital downloads and DVD rentals as an alternative, but he said Disney can monetize Marvel's content effectively in other ways.

"They're not bulletproof - they are not immune from the changes that we're seeing, but they have established a footing that we think is more solid than what you typically see in the nonbranded non-character driven movie," Iger said on a conference call following Disney's announcement of its deal to buy Marvel.

As for Marvel's extensive production and distribution deals with Disney competitors, like Viacom Inc. (VIA, VIAB), Sony Corp. (SNE) and News Corp. (NWS, NWSA), Iger said Disney will honor the agreements and decide whether to continue them when they expire.

"As the current agreements that are in place sunset and as we look to exploit the library of characters more broadly by leveraging Disney's infrastructure, we think over time that's when the revenue synergies really can start to kick in," said Iger.

Disney Chief Financial Officer Tom Staggs specifically addressed Marvel's distribution deal with Viacom's Paramount Pictures, saying he expects Disney to move to distribute all Marvel films over time.

-By Nat Worden, Dow Jones Newswires; [phone]; [e-mail]