The Journal. - With Great Power, Part 1: Origin Story

Episode Date: July 5, 2023

Marvel Studios is the most dominant film studio on the planet today. But 25 years ago, it was bankrupt and selling furniture for cash. Its astonishing revival begins with two men: Ike Perlmutter and Avi Arad.  Industry insiders like comics writer Brian Michael Bendis and film producer Amy Pascal recount how Marvel went from its lowest point to its first big-screen blockbuster, Sony’s “Spider-Man” in 2002.  Learn more about your ad choices. Visit megaphone.fm/adchoices

It's April 2019. Inside packed movie theaters, audiences are watching the climax of Avengers Endgame. And what you're hearing... is the sound of peak Marvel mania. Theater shaking cheers as every Marvel superhero from the studio's 22 movies over the past decade appears on screen. All together, for the first time. I wasn't recording in my theater,

but I remember the cheers. There are tons of similar videos online. People in the theaters were losing their minds because superhero movies are more than just hits. They're at the center of global popular culture. And it's not just Marvel superheroes. It's DC Comics, too. You can't escape them.

So Iron Man, Captain America, Thor. Spider-Man. I just love everything at the heart of the Spidey universe. Gamora and Star-Lord. Superman and Batman were my first love. Hulk, Black Widow, and Hawkeye. Black Panther, Ant-Man. Rocket Raccoon 2.

Catwoman, Doctor Strange. Nick Fury, he's the guy who connects the Avengers. To me, this is mind-blowing. I remember going to my local comic book store as a teenager, spending $1.75 for the latest issue of Flash or Spider-Man. They weren't cool, and neither was I. Trust me. Today, I'm a journalist. I've spent most of the past 20 years covering the entertainment industry. In that time, I've seen movies based on comic books I grew up reading take over Hollywood.

In that time, I've seen movies based on comic books I grew up reading take over Hollywood. Some of them are great. The Dark Knight, Black Panther, Logan, and Into the Spider-Verse are among my favorite films. Others aren't so good. But most of them are big at the box office. So big that they've pushed other genres I love, like original dramas and comedies, to the margins of the movie business. How did that happen? How did those comic books that used to be just for geeks like me

become one of the most powerful forces in global entertainment? Primarily, it's the story of one company. Marvel, the most successful film studio of the modern era. Just 25 years ago, Marvel was bankrupt. Its climb to the top is an astonishing tale full of unlikely heroes, bitter feuds,

little-known deals, and incredible luck. It's not just the greatest business story in Hollywood this century. It's one of the best business stories of our lifetimes. And whether you think superheroes are the only reason to go to movie theaters these days, or they're the death of cinema, you've got to know how it happened. From The Journal, this is With Great Power, The Rise of Superhero Cinema. I'm Ben Fritz, and this is Episode 1, Origin Story.

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You can't get a well-groomed lawn delivered, but you can get chicken parmesan delivered. Sunshine? No. Some wine? Yes. Get almost, almost anything delivered with Uber Eats. Order now. Alcohol and select markets. See app for details. The story of Marvel Comics is a long one, going back nearly a hundred years. And as a lifelong nerd, I would be remiss if I didn't at least mention the names of legendary Marvel artists and writers like Steve Ditko, Jack Kirby, and of course,

Stan Lee. But the story of Marvel Studios, the company that makes Marvel movies, features a somewhat different cast. It begins about 30 years ago with a pair of Israeli immigrants named Ike Perlmutter and Avi Arad. These days, Avi lives in Beverly Hills, where I went to visit him. Avi is 74. He has white hair and a short beard.

His home office is a shrine to Marvel. Signed movie posters, a life-size Spider-Man figure, and hundreds, hundreds of toys. So Avi, just so you know how this will go, we're going to cover a lot of stuff in your amazing career with Marvel. And to whatever extent you can remember for a podcast, it's great to tell stories. I'd love to hear your anecdotes about certain meetings with people, or the more details, the better. Great.

Great. So, I think, you know. My suggestion is to start, how did you get to Marvel? That's exactly where I want to start. I know that you were a toy designer, right? Yes. So, how did you end up working at Marvel after starting your career as a toy designer? Okay, I'll tell you the story.

Please. So I came to this country and I went to school in Long Island. I went to Hofstra. Avi grew up in Tel Aviv reading Spider-Man comics in Hebrew. He moved to the U.S. in the 1970s to study engineering, but soon found himself working in the toy business. So fast forward, I got into it and I fell in love, of course, with toys. I'm starting to design toys for different people. And a friend of mine who was a media guy said to me, I want you to meet someone.

And that was Ike Perlmutter. Ike Perlmutter. Ike Perlmutter. An extremely tough businessman who would go on to become one of Avi's closest associates. Ike is famously private. There are barely any photos of him, and he pretty much never gives interviews. That's why you won't hear Ike's voice in this podcast.

But we did speak with him, on the record, just not on tape. And you'll hear some details from that conversation later. Like Avi, Ike also immigrated to New York from Israel as a young man. I came here, he had nothing. Zero. He was walking in the street, going to a funeral to sing the Kaddish, and started selling things in the street, and funeral to sing the Kaddish and started selling things in the street and then from a car. Ike was in the business of liquidation.

That means he would find products companies were eager to unload, from last season's clothes to last year's electronics, and he would sell them at just enough to turn a profit. When Avi went to Ike's office for the first time in the early 90s, he found it was full of random stuff. I come to his office, and it's dog food, Revlon. He was a liquidator, but he was very, very wealthy by then already.

Ike wanted to talk to Avi about a struggling toy company he ended up owning through one of his liquidation deals. It was called Toy Biz. And Avi was surprised to find that Toy Biz owned the rights to make products based on superheroes.

Marvel superheroes. This company had the rights because Marvel had zero value then. No one wanted Marvel, ah, comic book, comics are for kids, no, comics are for geeks, whatever. It was worthless. No one wanted to do anything with it. Marvel had revolutionized the comic book business in the 1960s with a slew of new characters like the X-Men, Hulk, Iron Man, and its crown jewel, Spider-Man. By the 1990s, though, Marvel management had made a series of bad business decisions,

and the company was floundering, burdened with hundreds of millions of dollars in debt. The rights to make Marvel action figures had ended up in the hands of Ike Perlmutter, but he had no idea what to do with them. Ike had never read a comic book. He didn't know Captain America from Captain Crunch. He says to me, so what do you want to do? I want to make these toys. They made these toys. No one wants it. No one cares. What about Spider-Man? What's Spider-Man? I mean, he really is agnostic to culture. Never had kids, and forget it. Don't go to movies. Avi's knowledge of Marvel, plus Ike's strong business sense,

proved to be a formidable combination. In the next couple of years, the pair made millions of dollars selling Marvel toys. Then, in 1996, Marvel itself came crashing down. Unable to pay all that debt, the publisher filed for bankruptcy. There were a bunch of bids to buy Marvel out, including one from Avi and Ike, who saw another opportunity to get a struggling company on the cheap. They argued that since comic book sales were falling and toy sales were growing, the guys

who knew toys were best suited to take over. And they won. In 1998, Avi and Ike took control of Marvel. But there was still a lot of work to do. The company emerged from bankruptcy with virtually no cash. And Marvel at the time was in very poor shape. Comics are not selling. Comics sold at the time like newspapers.

But the toy companies started to build big time. And what made you confident that Marvel could be a very successful company at that point? Comic books are basically storyboards of great stories. People want to fly. People want to be a hero. People want to be a villain. And it's all part of the same gestalt. And you are a villain if you feel someone done wrong to you.

In my book, villains are victims of circumstance. You're not born like that, you know. victims of circumstance. You're not born like that, you know? Not everyone was as optimistic about Marvel's future as Avi. Not even the people writing the comics. My name is Brian Michael Bendis. I'm a writer and a comics creator,

and I'm most known for co-creating Miles Morales, Jessica Jones, Naomi, Riri Williams, and such. So would you tell us sort of how you got started working at Marvel? At six years old, I stood up at the dining room table and announced I would be the artist of Spider-Man. And everything I did from that moment on was towards the goal of working at Marvel Comics. Growing up, Brian had heard about the Marvel bullpen. It was an exciting place where writers and artists joked around and bounced ideas off each other.

To a young fanboy like Brian, and me, it sounded like heaven. In 1999, shortly after Avi and Ike took over, Brian and other writers arrived at Marvel's headquarters in New York. But it wasn't exactly what they dreamed about. And when we walked in the door, most of the bullpen's lights were off,

the desks were abandoned, and there was piles of furniture in the corner with a post-it note that said sold. They were selling filing cabinets for cash. And I did, I think I may have actually said out loud to my friend,

oh my God, I'll be writing the last Marvel comics. Selling furniture for cash was a way to keep the lights on. But the new Marvel's main goal was to sell more toys. And Avi thought he knew how to do it. He just had to convince Ike. I said, we have to do a television show. He said, oh, how do we do a television show? What do we do?

I said, the way to do a television show is we spend money and make a show. What are you advertising? Our toys. That's it. He was in. So the way you convinced Ike Perlmutter to get into the entertainment business was that he would sell toys. It was all about toys initially because he understood. He knew how to do these things and was very successful.

And we had a deal. I do the creative. I gave myself a title. I became chief creative officer. And I said, you stay out of it because you'll get a heart attack every time we move. Ike would have a heart attack because TV shows and movies cost money. And Ike Perlmutter hated spending money.

But Avi convinced him to make an animated show based on the mutant superhero team X-Men. It was a hit. And more importantly to Ike, it sold a lot of toys. The TV show was just a warm-up, though. Avi wanted to make movies. Marvel's competitor, DC Comics, had released four Superman films and four Batman films from the late 1970s through the mid-90s. They made the characters famous worldwide. What was actually happening, and the reason we were invited in,

was the starting, the seeds, of regrowing the business from scratch. We all know these are movies and TV shows. We all can see it. And so it was just so fascinating watching that wall fall down. Marvel had an X-Men live-action film already in the works, which would go on to be a moderate success. But to Avi, there was one character poised to be a home run and turn around Marvel's fortunes.

Spider-Man was ace in the hole, you know. That was the big one for me, from where I come from. I come from. Spider-Man had been Marvel's most successful and beloved character since soon after his first appearance in 1962. The basic premise is a teenager named Peter Parker gets bit by a

radioactive spider, becomes super strong, shoots webs, and fights crime in a red and blue suit. Making a Spider-Man film wouldn't be easy, though. In the 1980s, when Marvel was struggling financially, it sold the Spider-Man movie rights, according to reports, for just $225,000. And in the end, the rights to release the film on DVD

ended up in the hands of one of Hollywood's biggest studios. Sony Pictures owned a piece of the underlying rights to Spider-Man. And at the time also, Avi Arad was busy pitching the Marvel portfolio. That's Yair Landau. He was a junior business executive for Sony in the late 90s. Like Marvel, Sony was also interested in making a Spider-Man movie. The studio was looking for its next big hit, and at the time, superhero films were making a splash. 1989's Batman, a character belonging to Marvel rival DC Comics, was especially popular.

I'm Batman. belonging to Marvel rival DC Comics, was especially popular. I'm Batman. Our aspiration was just to achieve a fraction of the success that Batman had achieved. We didn't dare kind of set our economic sights at exceeding that, right? Because Batman was incredible. So that was our benchmark, was like, well, we think Spider-Man could do some fraction of what Batman did. But in order to make a Spider-Man movie, Sony had to strike a deal with Marvel, which meant Yair would have to negotiate with Ike and Avi.

Those negotiations would turn out to be one of the most important moments of his professional life. And in fact, here, I brought a prop. Oh. This is a Spider-Man ring that Ike and Avi gave me. Ike Promutter and Avi Arad are big characters. They're big personalities, right? Enormous. Tell me about Ike. What was your impression of him? Do you remember first meeting him? I do remember first meeting him. And as we started the negotiations with Ike and Avi, we flew out to meet with Marvel in New York.

Theoretically, it was in everyone's interest for a Spider-Man movie to get made. Sony wanted a hit film, and Marvel wanted money from Sony and the opportunity to sell more toys. Ike invited Yair and his boss, a man named Bob Wynn, to a deli around the corner from Marvel's office. Ike proceeded to push Bob's buttons the entire meal. How? Just was looking at ways to irritate him and to try to get a negotiation edge in advance of the negotiation. And Ike was just, and we won't do this, and you won't do that,

and we won't do this, and you need us, and we don't need you. And he offended Bob so much that we walked all the way from the Third Avenue Deli to the St. Regis where we were staying, just so he could cool down. And he was like, we are never going to make a deal with those guys. Still, Yair, who grew up watching Spider-Man cartoons, believed it could be the hit Sony was looking for. He thought it was worth putting up with Ike's antics. They had just emerged out of bankruptcy. They had no cash.

And they knew we had a sliver of the rights. And they also knew, obviously, that we were very interested in making Marvel movies. So they came to me and we had a sliver of the rights. And they also knew, obviously, that we were very interested in making Marvel movies. So they came to me and we negotiated a deal for 25 Marvel movies for $25 million. Did they put all of their characters on the table? Every single character that they controlled was on the table as part of that deal.

Think about that. The rights to 25 characters for $25 million. Iron Man, Thor, Captain America. These days, they're worth billions. And they were all available for Sony to take for a measly million dollars per character. It could have been the deal of the century. But when Yair took the offer to his bosses at Sony,

they passed. But when Yair took the offer to his bosses at Sony, they passed. The collective team decided they didn't care about the other Marvel properties, that they didn't want to invest in them. I was told nobody gives a shit about anybody but Spider-Man. Do you remember what you thought when they said that? I thought they were idiots. That's what I thought. But I was viewed as the suit because at the time

I wore a suit to work and their view was I didn't know anything creatively so my opinion

on what made sense in terms of because ultimately it's a creative decision right so my marching orders were

go back and just get Spider-Man so tell me about going back to Marvel and the negotiation to finally get the Spider-Man rights. I called Avi back and I said, they don't want to do the deal. They only want Spider-Man. And his response was, you guys are idiots. We're not doing business with you.

And we did not talk for several months. I believe it was six months. Sony declined to comment. Eventually, tempers cooled. We couldn't make the movie without them, and they couldn't make the movie without us. And that was the key to the negotiation. We were, you know, we were handcuffed, right? So they knew that they needed us to make it, and we knew we needed them. So that's what kept the negotiation going over the 12-month period. Finally, Yair made a deal with Ike and Avi. It gave Sony full control of the Spider-Man movie rights forever.

We paid them $10 million, which back in 98, 99 was a lot of money. And then they owned 5% of the gross receipts, so they got 5% of whatever revenue was generated by the property. Sony got 95% of the Spider-Man movie revenue. But Ike and Avi didn't care much about that at the time. They just wanted that $10 million to keep the lights on, and they hoped the movie would sell a lot of Spider-Man toys.

A Spider-Man film was finally going to be made, and it would launch a new era for Marvel and for Hollywood. That's after the break. Summer is like a cocktail. It has to be mixed just right. Start with a handful of great friends. Now add your favorite music. And then, finally, add Bacardi rum.

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Once Sony and Marvel reached a deal to make a Spider-Man movie, the person in charge of bringing it to the big screen was Amy Pascal. Amy used to run Sony's motion picture business, and today she's a producer. I met her at her office in a bungalow on a Hollywood studio lot. Tell me about sort of why you wanted to get into the film business. Like, what was appealing to you? I knew that I had no actual artistic talent. But I knew that I was good with people.

And I knew that I was interested in business. By the early 2000s, Amy had made a name for herself by developing beloved dramas and comedies like A League of Their Own and Groundhog Day. She showed me her library in her office, and it was filled with novels and history books. Oh, there's the Jane Austen section that, like, then becomes the Cleopatra section. Did you ever think back then that you'd that you'd be making movies out of comic books? How do you think that would have seemed to you 30 years ago? I was never a comic book person. I definitely was big reader but I think the books I read books as opposed to comic books that wasn't um I didn't know that I was going to love comic

books and I'm not sure that I'm a comic book person now. What I am now is somebody who loves Peter Parker. Peter Parker, the boy under the Spider-Man mask. The idea of a young man who is an ordinary person that something extraordinary happens to, and he's trying to navigate through his life how to be a good person and how hard it is to be a good person. And he was some kind of a cross between

Huck Finn and Holden Caulfield and Hamlet. That just all appealed to me. He's a character that's constantly in conflict, which is what you're always looking for when you make movies. Amy hired Sam Raimi to direct Spider-Man. At the time, he was known for horror movies like Evil Dead. But he too saw the story potential in Peter Parker. Here's Raimi at a press conference in 2001.

He's one of us, unlike Superman from the planet Krypton or other fantastic heroes. He's really a kid that we identify with. And they cast a young Tobey Maguire in the lead role. Sam only ever saw one person. He only ever saw Tobey. And he did a screen test with Tobey and we're like, maybe. And he did another screen test with Tobey and we were like, oh, of course. As production went on, Amy became nervous.

Spider-Man was a superhero movie, but it was also about a teenage kid with a crush. Plus, the budget was ballooning. It's the most expensive movie, and I remember sitting in the editing room and saying, you know, we need another $20 million to finish the movie. What was your level of anxiety versus confidence when that movie was opening, as you recall?

I was petrified, because I remember thinking, everyone's going to think it's not a big enough action movie. Everyone's going to think it doesn't have enough, like, testosterone. And I remember thinking, oh my God, I've made like a, we, we, sorry, we, we have made a really emotional comic book movie. I hope people are going to go for it. A lot of the plot of Spider-Man focused on Peter's relationship with his crush next door, Mary Jane. It was an unusual focus for a superhero movie back then. You're taller than you look. I hunch. Don't. By the time Spider-Man was ready to release in theaters, the budget had reached $140 million, which was Sony's most expensive film ever at the time. On opening night, Amy, Avi,

and Tobey Maguire drove in a party bus to movie theaters around Los Angeles. And like, nobody knew who Tobey was before that movie. I mean, sorry, Tobey, not that nobody knew, but he wasn't the same Tobey as he was after. And you know, when we walked in, nobody cared. The movie was over. He was mobbed. It was very exhilarating. Spider-Man the movie was a huge hit, bigger than Superman or Batman. It was the first film to open to more than $100 million. $114 million.

$114 million. Nothing had ever done that before. It was one of the most exhilarating moments of my professional life. Sony had never had that kind of a success before, but nobody had. I mean, it was like the biggest opening of all time for a very long time. And that felt pretty good, especially because we made the movie that we actually wanted to make. Here's Yair again, the Sony executive who negotiated the rights with Marvel.

There was a window of time after Spider-Man came out where we gave everybody a bonus. We handed out $100 bills. Every employee in the company, we handed out $100 bills. That was really, really gratifying. It became and remains, essentially, the most significant piece of IP that Sony Pictures controls.

For many years, it was the reason that Sony kept the lights on. You know? Was there ever a calculation, this is how much Spider-Man's worth to Sony Pictures, that you recall? Well, it was worth everything. Fair enough.

On a creative level, it proved out that the commitment to the core characters as relayed in the comic books is rewarded by the audience. books is rewarded by the audience. So I think that it was both a validation of the comic books as the core underlying story and character engine to build around and the scope of how big that audience can be. I mean, there were very few superhero movies being made back then. The big box office movies are like Saving Private Ryan, Titanic, right? That was, so I mean, in hindsight, you could kind of think, why did it take so long for people to see this potential? I think that you needed a generation that respected comics, right? Even as late as the 90s, people didn't respect comics as a genre of storytelling, right? They weren't novels. They weren't high art.

of storytelling, right? They weren't novels, they weren't high art. And I think that you needed a generation of younger people, basically, who grew up reading comics and who thought comics were great. Spider-Man was a monster hit, but not everyone was happy. We had made more money as a company

than Sony Pictures had ever made. So, you know, the funny thing is, we were so successful that Ike and Avi sued us. Avi and Ike sued Sony. You'd think Marvel would be thrilled at all the money Spider-Man was making. Ike told the Wall Street Journal that even though he was happy the movie did well,

he was mad about how much money Sony was making. And when the world started referring to Marvel's marquee character as Sony's Spider-Man, he was furious. They felt like, hey, wait a minute, we didn't get enough of this. Didn't feel like we're all on the same team here. We're all trying to achieve the same goal. We were never all on the same team here. We're all trying to achieve the same goal. We were never all on the same team. And is that primarily just because Ike was always looking for an advantage, always looking for a way to have a little more power?

I, you know, I think it was something of tremendous value that was where the rights were split. And, you know, I think they were willing to do what they needed to do in order to claw more of it back. Ike prided himself on being a savvy businessman. Now he saw that when Marvel was coming out of bankruptcy and desperately short on cash, he had made a bad deal with Sony. Here's Avi. So it was very contentious.

He developed a fire in his belly of hatred and started terrorizing them on things that he had the right to, and then some. Hollywood wrote the book on how to f*** you. They still do. I remember so many meetings with Ike Perlmutter where he carried around his briefcase that everybody told me there was a gun in it,

but I don't know if that was ever really true. But he was pretty unique. Anything more you can tell about what made him unique? He's a really good businessman, let me put it that way. Well, look, I'll push it. I mean, Ike is a very frugal guy, and he's a very tough negotiator. The toughest. The toughest.

So let's actually go to my, I mean, I know some of this, right? You say it, then. After the success of Spider-Man, I don't know exactly when, Ike started to feel, hey, this is our character. Sony's making a lot more money than we are, and the world is calling this Sony Spider-Man. How did that play out for you? Well, in the end, they made it more difficult for us to have the freedom that we needed to, you know, to continue making the franchise. For the record, Ike told the Wall Street Journal that he has long owned a gun,

but never took it to business meetings or showed it to anyone. Eventually, Marvel and Sony settled their lawsuit. Marvel got better terms on the toys, while Sony retained the rights to produce Spider-Man films and keep most of the profits. to produce Spider-Man films and keep most of the profits. For Ike and Avi, there was one big takeaway. Movies with Marvel characters could be huge hits. But Ike never wanted to make a deal like the one with Sony again. Going forward, things were going to be different. Ike started to come around to an idea he never previously would have considered, and nobody thought was possible. That a comic book company should make its own movies.

Next time, on With Great Power. We were a small toy company, a licensing company. We were a nothing company. So the idea that we could actually make movies was an astounding idea and somewhat unbelievable to us. Coming tomorrow. With Great Power is part of The Journal, which is a co-production of Gimlet and The Wall Street Journal.

I'm Ben Fritz, host and reporter. This episode was produced by Alan Rodriguez-Espinoza, with help from Matt Kwong, Lisa Wang, John Sanders, Matt Frasica, Colin Campbell, and Marina Henke. The series is edited by Catherine Brewer and Annie Baxter. Fact-checking by Nicole Pasulka. Sound design and mixing by Griffin Tanner. The music in this episode is by Bobby Lord, Peter Leonard, Griffin Tanner, Audio Network, and Epidemic Sound.

Our theme music is by So Wiley and remixed by Nathan Singapak. Special thanks to Maria Byrne, Rachel Humphries, Ryan Knutson, Kate Leinbaugh, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Sarah Rabel, Pierre Singey, Ethan Smith, Katherine Whelan, and Robbie Whelan. Thanks for listening. Check out episode two tomorrow. I just, I just, what I love the most is I love the after credit sequences just as much as anybody on the planet earth. I think they're the greatest thing that's happened to cinema in the last 20

years. Sometimes my son was sitting down. I'm like, this movie doesn't actually have a post-credit sequence. You know, like not all movies have them. You know, it's a little baffling to him sometimes. No, my favorite was it happened this year. We were at Ant-Man and like the movie was over and a family stood up and another family said, have they taught you nothing?

Sit down. It's not over. Like it's been 15 years.