Barron’s Fruit

March 20, 1992

Well, several weeks back, I slammed Marvel rather thoroughly for what I perceived as their rather craven and weak-kneed handling of “Alpha Flight #106.” So now, to confuse everyone completely, I’m going to turn around and defend them on another matter entirely.

The topic of today’s symposium is an article that ran in the February 17 issue of “Barron’s,” a weekly financial newspaper that has a great deal of influence in the world of investments…particularly for the small investor. In that issue, writer Douglas A. Kass elected to do what amounted to a hatchet job on Marvel, stringing together a series of “ifs,” “ands” and “maybes” and concluding that Marvel is “over-inflated and due for a fall.”

The article had an immediate impact on the financial community, sending Marvel’s stock into a tailspin and causing Marvels reps scurrying into the position of damage control. Follow up pieces in the LA Times and the Chicago Tribune detailed the panic seizing investors.

Unfortunately, none of the newspapers, nor any of the investors, were really aware that Kass’ article was rife with half-truths, omissions, and shoddy journalistic techniques. It was all chock-full of sound effects such as “Pow” and “Smash,” which I must admit immediately puts me off. I had thought that the “Batman” film had left those dámņëd relics from the campy 1960s TV show far behind. But here’s Barron’s to bring it back for us again. (Apparently following Barrons’ lead, the Times and Trib likewise peppered their articles with “k-pows” and “Biffs.”)

Perhaps I’m a bit thin-skinned about this derisive attitude towards comics, but if they’re running articles that are going to panic investors and cost companies thousands, if not millions of dollars, it seems the least they could do is treat the subject seriously.

Kass begins his article with a detailed analysis of just where the money from stockholders is going. Putting aside the annoying sound effects (and Kass’ impression that Marvel publishes the “Shazam” Captain Marvel), I found this section of the piece informative and interesting. The majority of the money, it seems, is going to financier Ron Perelman. I must admit this comes as no shock, but the amount of money passing into his pocket is amazing.

Once Kass finishes his analysis, he concludes that Marvel’s current stock value “might be tolerable if Marvel had strong growth prospects. Instead, Marvel already has wrung just about as much out of the market as possible and could run into unfavorable earning comparisons in the second half of this year.”

Now…did Kass conclude this from talking to Marvel and learning what their publishing plans were?

No.

Did he contact distributors and get their opinions? Get a feeling for how they were planning to order Marvel’s, and how they viewed Marvel’s growth prospects?

No.

He spoke to retailers. A dozen, to be specific. And, surprise surprise, the retailers gave a very negative assessment of Marvel’s future. They didn’t like the price of Marvel comics. They had overordered and had too much backstock. Marvel was, creatively, nowhere near as interesting as independent comics.

From these sentiments, Kass concluded that Marvel’s future was bleak.

I have no doubt that retailers told Kass these things. There’s just one problem: When I was Marvel’s direct sales manager, I talked to a lot of retailers, too. Far more than Kass did. I was on the road an average of one week a month talking to retailers all over the country. And many of them said the exact same things that retailers told Kass, and predicted that Marvel was going to collapse.

But they were saying that five years ago. And seven years ago, and ten years ago.

Marvel, in the meantime, has continued to grow and prosper. Sure, it’s had its bumps along the way, but it is still the dominant force in the comic book publishing industry.

What it boils down to is that many retailers simply don’t like Marvel Comics. They don’t like the title they’re publishing or the company policies. Retailers would tell me that they hated ordering crossover titles or “yet another” mutant title…even if the books were selling for them. Retailers would also tell me that they would always recommend titles by independents to their customers because they were the retailer’s personal favorites and, as far as the retailers were concerned, those were the books that should be pushed.

All of which is fine. But to Kass, the long-standing disillusionment that some retailers feel towards Marvel and forecasts it as the beginning of the end, rather than a decades-long pattern.

He shores up his findings with “facts” that are misleading and contradictory. For example, he states that Marvel is in for trouble because “Consumers are no longer willing to keep shelling out anywhere from $1.50 to $2.95 for a comic book.” He does not point out (or maybe he’s simply unaware) that the majority of Marvel titles are, in fact $1.25…including such top seeds as “X-Men” and “X-Force.” It is, in fact the independents which generally start at $1.75 and up, prices dictated by their lower print runs.

Yet Kass later claims that one of the things hurting Marvel is that “consumers…increasingly are turning to upstart competitors,” and proceeds to list various independents who publish titles with higher cover prices. But I thought consumers were unwilling to may $1.50 to $2.95 for a comic.

This little gap in logic apparently does not deter Mr. Kass’ evisceration of Marvel comics. But why use logic when you can fall back on groundless supposition? He characterizes “Alpha Flight #106” as Northstar’s “widely publicized gay `outing,'” and implies that Northstar’s revelation was “fortuitously timed to coincide with the January price increase.”

He doesn’t bother to point out that the publicizing didn’t come from Marvel, but from news services who picked up on the story. His contention that Marvel saw “AF #106” as a means of making price increases go down easier, when in fact Marvel would have been much happier if the story had never seen print, is typical of his absurd logic. Marvel’s handling of “AF #106” was not one of its more shining moments…but it was hardly a cold-blooded marketing maneuver.

Even on those occasions where Marvel looks bad, Kass manages to make Marvel look even worse. Kass describes Marvel’s botched edition of “Cage,” where the promised fancy cover for the first issue failed to materialize. Dealers who thought they were getting an acetate-overlay, 3-D effect cover, “accordingly stocked up on non-returnable orders,” and without that cover to give it the additional push, are “stuck with cases of surplus comics.”

What Kass doesn’t bother to mention is that, because the title was incorrectly solicited, all of those surplus comics are fully returnable. The retailers aren’t “stuck” with them at all. Certainly no one is happy that Marvel didn’t deliver with the promised goods–least of all Marvel–but the company has a decade-old policy that if a book is missolicited, it’s fully returnable. Distributors and retailers know this, but Kass doesn’t. Nor did he check.

Kass (unsurprisingly) predicts bleak futures for Marvel’s licensing side. Marvel has recently made tremendous strides in licensing, finally getting out action figures and playsets (whereas DC had such toys available years ago.) Yet incredibly, Kass actually manages to see this as a negative, claiming oversaturation. Has he bothered to call toy stores or manufacturers and ask if they’re pleased with the sales, or what their forecasts are? Need you ask?

He manages to downplay the announced Spider-Man movie by stating that the buyer, Carolco, has financial problems of their own. He states that if the Spider-Man movie doesn’t materialize, it loses Marvel potential licensing fees.

Fair enough. However, Kass makes no mention of the “X-Men” animated series scheduled to run on the Fox network. Now who knows…maybe that series will be lousy and it will have no impact on Marvel. On the other hand, an animated series generated millions upon millions for the heroes in a halfshell, so the cartoon X-Men could represent a major windfall for Marvel. More action figures, more playsets, more exposure for the comics. But hëll, why should Kass present a potential upside at any point in his article when he’s this far along?

Kass states that Marvel is vulnerable because three privately held distributors account for more than 50% of publishing revenues…and that if any of them hit financial problems, Marvel could have difficulties. Okay, that’s true. Did he contact Capital City to find out if they’re having difficulties with receivables? Is there an indication that Diamond is flawed? Nope. Just more “what if’s.” And if Toys-R-Us went belly-up, then Hasbro and Kenner would be in trouble.

Even the direct market itself is a negative to Mr. Kass. Nearly 80% of publishing revenues, he claims, are derived from the direct market.

Now…this is good. Sales to the direct market are inherently more economical and more profitable for publishers, because it means they can print exactly what they can sell. Minimum effort for maximum profits (as opposed to the print three/sell one situation existent in the returnable market.)

But no, Mr. Kass claims this is bad because…in essence…there’s a recession on, and retailers are vulnerable. Of course they are. Everyone is. No one ever claimed that Marvel is recession-proof. Nothing is recession proof. So why single out Marvel?

He claims that collector interest is waning in comics. His proof? He claims the Sotheby’s auction was a “disappointment.” By whose estimation? Sotheby’s, who states that the money brought in didn’t meet their estimates. But in order to convincingly prove that collector interest is waning, Sotheby’s should be able to compare the results this time with their previous auction, so they can say, “Look, a year ago we made X dollars, but now we made X minus $100,000.”

Unfortunately, Sotheby’s can’t do that. Why? Because they never had a comic book auction before. So a quarter of the items failed to sell altogether. So what? Collectors gasped at a number of items which did sell, for many times what they were priced at in the Overstreet Guide. And who published a number of those high-selling comics? Why…Marvel.

More proof of Marvel’s certain doom? Kass cites the “imminent exodus” of Rob Liefeld, Erik Larsen, George Perez, Jim Valentino, and Todd McFarlane. Hot news flash, Mr. Kass: Todd hasn’t done work for Marvel for close to a year; George Perez is presently busy pencilling a two-issue “Hulk” bookshelf format (I know, because I’m writing it; the first issue is already pencilled); and Jim and Erik, for all their talents, are not (no disrespect, guys) what I would term, in baseball parlance, as “franchise players.” The only one who possibly fits that category right now is Rob, who has yet to prove his long-term selling power.

Who is an example of a franchise player in Marvel’s history? The kind of people who, when they leave, makes you go, “Oh my God.”

Jack Kirby. John Byrne. Chris Claremont. The Simonsons. People whose work has been an underpinning for the success of Marvel Comics. And they’ve left. And Marvel continued. And they came back, and Marvel continued. And they came back and left and…well, you get the idea. And Marvel has continued to grow. Not without its hiccups. But it’s grown.

I’m sorry, but there is simply no historical precedent upon which to base Kass’ contention that the defections of Liefeld et al “will create a serious threat to Marvel’s creative franchise.” Inconvenience and embarrass, yes. But history does not support the conclusion that Marvel is seriously threatened.

This is not to say that Kass might not be right. Perhaps Marvel will indeed run into major problems. But it’s just as likely…indeed, based on historical precedent, more likely…that it will not. Kass, however, doesn’t bother to point that out to investors. Why ruin a perfectly good butchering job by pointing out that the slaughtered cow has its own point of view?

There’s only one point that Kass makes solidly enough to stick: That Marvel might become editorially timid, unwilling “to take artistic and literary risks.”

One can already see that happening. Marvel’s horrified reaction to the splash that “Alpha Flight #106” can only lead any thinking individual to conclude that Marvel will probably take steps not to let it happen again. That means editorial clampdowns and an inclination to play it safe whenever possible. Because Marvel is now answerable to licensees and investors, all of whom now have a stake in the company and want to make sure that nothing is going to come along and ruin their status quo.

This would be, of course, the single worst thing Marvel can do. Because, sooner or later, Ron Perelman is going to go away. He will have made his money and will sell the company. It’s inevitable. But the characters and (with any luck) the readers will still be there. And if they become editorially stagnant in order to satisfy the desires of a transitory boss, that…and that alone…will the most damaging thing that could happen.

Marvel’s already seen the results of trying to play it safe. They tried to ignore “Alpha Flight” so as not to upset all the investors, and Barron’s came along and upset the investors anyway.

The question becomes, What will Marvel learn from this Barron’s piece? They could decide that playing it safe is no guarantee of anything, and that you might as well go out there and publish the best dámņëd comic books you can. Let the chips fall where they may.

Or they may decide that, since they can’t control ill-informed gentlemen like Mr. Kass from stirring things up, they should do everything to control that which they can control, namely the contents of the comics. The reasoning will be, “We have to do what we can so that things won’t get worse.” This little piece of logic, of course, will not only not protect them, but in fact will make things worse.

And Mr. Kass’ little hatchet job will become a self-fulfilling prophecy.

(Peter David, writer of stuff, was not only amazed to discover that Mr. Byrne shared his sentiments about the Feb. 21 column, but was further astounded to learn that that they both have a fondness for Edmund (“I have a plan so cunning you could brush your teeth with it”) Blackadder. Good lord! Could the “great feud” be ending as common interests are discovered? Stay tuned…)