Marvel Entertainment 3Q Profit Down 60% On Lower Film Revenue

Marvel Entertainment Inc. (MVL), which is being bought by Walt Disney Co. (DIS), reported third-quarter earnings slumped 60% on lower film revenue, as well as lower licensing sales related to last year's "Iron Man" and "Incredible Hulk" films.

On Aug. 31, Disney, the largest U.S. media company by market value, said it agreed to pay $4 billion for Marvel, the creator of comic-book characters Spider-Man, the X-Men and thousands of others.

Marvel last month said it wouldn't provide a financial outlook for 2009 or next year given the proposed acquisition. In August, the company had raised its 2009 earnings and sales forecast, citing a stronger-than-expected performance in the first half.

The company Tuesday posted a profit of $20.4 million, or 26 cents a share, down from $50.6 million, or 64 cents a share, a year earlier. Net sales tumbled 42% to $105.7 million, on a lower level of film activity and related licensing.

Analysts polled by Thomson Reuters expected, on average, earnings of 24 cents on revenue of $93 million.

Marvel's licensing business--an increasing area of focus for the company--saw sales decline 16%. The company's publishing segment's sales were down 5.8%, while film production sales slumped 73%. Operating profit was down for licensing and publishing, while film production swung to a loss.

Chairman Morton Handel said the results were strong, despite the absence of any Marvel Studios feature film release in 2009. He added the company was focusing on licensing opportunities tied to next year's release of "Iron Man 2," as well as development on the company's "Thor," "Captain America" and "the Avengers" projects.

About 7% of Marvel's $676 million of revenue last year came from toys, down from more than 70% in 2000, The Wall Street Journal reported. The company's business model has shifted rapidly in recent years. Last year was the first year the company financed its own movies, which brought in $255 million during 2009 alone--more than the company's entire revenue in 2000. Licensing has grown for Marvel, from 8% of revenue in 2000 to 43% last year.

Shares of Marvel closed Monday at $50.01 and were inactive in premarket trading.

-By John Kell and Jenny Park, Dow Jones Newswires; 212-416-2480; [e-mail]