The Journal. - With Great Power, Part 2: Some Assembly Required

Episode Date: July 6, 2023

In a meeting at Donald Trump’s Mar-a-Lago resort, Marvel’s Ike Perlmutter is pitched an unusual idea: That a small comic book publisher should make its own movies.  A ragtag crew working above a car dealership borrows $525 million, hires Jon Favreau and Robert Downey, Jr., and makes “Iron Man.” After its surprise success, Disney buys Marvel.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Previously on With Great Power. You know, the funny thing is, we were so successful that Ikenavi sued us. So it was very contentious. He developed a fire in his belly of hatred. I think they were willing to do what they needed to do in order to claw more of it back. In 2003, a young Hollywood executive named David Maisel flew to Florida for an important meeting at a well-known resort. It was over lunch at the Mar-a-Lago Country Club. I remember Donald Trump came by the table to say hi to Ike. And Ike introduced me to Mr. Trump at the time. And I remember Ike saying I was from Hollywood.

And I think this was right before Apprentice started in 2004. And Donald saying something about his upcoming television show. But David wasn't there to rub shoulders with the future reality TV star turned president. He was there to share an ambitious idea with Ike Perlmutter, a member of the Mar-a-Lago Country Club and the head of Marvel. What was your impression of Ike Perlmutter the first time you met him? Very positive, actually. I respected his directness and his intelligence and his frankness. Ike was still angry in the aftermath of the Spider-Man movie. He felt Sony received too much credit and

too much money for a film based on Marvel's character. And he felt that Marvel had gotten screwed. For David, Ike's anger was an opportunity. David grew up doing theater and reading comics, but he ended up going the business route. He earned an MBA from Harvard and worked at companies including Disney. He dreamed of one day running his own movie studio and thought Marvel, which was still pursuing licensing deals in the wake of Spider-Man's success, could be his vehicle. So he made a pitch to Ike. I pitched him the idea of Marvel financing its own movies. to Ike. I pitched him the idea of Marvel financing its own movies and because of that having full green light authority and scheduling authority, having full financial upside and having full creative control. The pitch was simple. If Marvel made its own films, it could keep all the profits,

unlike what happened with Spider-Man. And it could produce its films with an eye toward maximizing toy sales, which was still Ike's favorite way to make money. Did you think you had a good shot of succeeding in this pitch? It's a long time ago, but I think overall, I had a bit of a fortunate delusion in thinking that things would work out if I knew how wild this idea was and how many hurdles would have to be overcome. The amount of hurdles was tremendous, but I felt very passionate about this potential. The idea of a company like Marvel making its own movies may seem obvious now, but in 2003, it was unheard of. Back then, companies that produced comics or books or toys always licensed their products to Hollywood studios, and those studios made the films.

That's just the way it was done. It just seemed insane to us at the time. That's just the way it was done. It just seemed insane to us at the time. This is John Turitsyn, Marvel's longtime top lawyer and a close advisor to Ike. And why did it seem insane? Because producing a movie is such a huge project. Producing movies is something that movie studios do. And 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. But Ike was intrigued. He gave David a job and a mission, to raise the funds to make it happen. After all, producing movies cost hundreds of millions of dollars, hundreds of millions of dollars. Hundreds of millions that Marvel did not have.

Luckily for David, it was the mid-2000s, a few years before the financial collapse. Wall Street was booming, and banks were loaning money to practically anyone who asked. At the time, I'd say the environment was very fortunate. A lot of loans were made that perhaps should not have been made. Probably our loan should not have been made. Merrill Lynch agreed to loan Marvel $525 million to make movies. This was a critical moment for Marvel Studios and Hollywood. For the first time ever, a small comic book publisher,

with no movie-making track record, had the money to produce its own films. Coming up, what it took for Marvel to turn this crazy idea into reality. From the Journal, this is With Great Power, the rise of superhero cinema. I'm Ben Fritz. This is Episode 2, Some Assembly Required. With Uber Reserve, you can book your Uber ride in advance. Some assembly required. With Uber Reserve, you can book your Uber ride in advance. 90 days in advance.

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With more than half a billion dollars in hand, Marvel jumped into the business of moviemaking. The first question was, which superhero to start with? They didn't have the film rights to their most famous characters, like Spider-Man and X-Men. Those were still licensed to other studios. The characters they did control were decidedly B-list, maybe even C-list. So there wasn't an obvious choice. And we were trying to decide which character to base the first movie upon.

We did a focus group with kids, and we described the characters to them. We showed them images of the characters. We asked them what their thoughts were about the characters, and we took their opinions throughout the day. John Toritsyn said the goal of the focus group was to ensure that whichever movie Marvel made first would essentially be a good toy advertisement. Our focus was on selling toys. We never viewed the movie studio itself as a way that we're realistically going to generate profits. We thought we would use the movies as a vehicle

to enhance the attraction and popularity of characters. At the end of the day, after we described Iron Man to the focus group kids and said he could shoot things out of his hand and he could fly and he had these powers, they loved Iron Man. Somebody suggested to me that they thought, somebody who worked at Marvel previously, that some kids thought that Iron Man was like a robot, that it sort of was like a Transformers kind of a thing.

And that was part of the appeal. That's right. I mean, I think to the kids in the focus group, they thought Iron Man was great. Iron Man was like a robot. It had all the attributes and attraction of a robot character. The kids had spoken. Marvel decided to make an Iron Man movie. It was risky. He wasn't a household name like Spider-Man or Superman. Marvel also greenlit

The Incredible Hulk, its most famous property that wasn't licensed to another studio. The new Marvel Studios set up shop in a decidedly non-glitzy space above a Mercedes-Benz dealership in Beverly Hills. The executives there focused on making the movies. Meanwhile, Ike Perlmutter stayed behind in New York, where he kept a close eye on budgets.

Now that Marvel was making its own movies, every dollar it spent was potentially a dollar less in profit. Ike Perlmutter was very hard on costs. He was a guy that had made his money by dealing with companies that had slid into bankruptcy or into financial distress. So when Ike began focusing on making movies, he brought that mindset over to the movie studio and applied it on the movie studio. Did that cause any pushback or difficulties with the producers or filmmakers in LA? Oh, sure. I mean, it's a completely different mindset. The mindset of Hollywood tends to be to spend more money to make bigger films, to make them more attractive, to spend more money on special effects, to spend more money on special effects, to spend more

money on talent. That was the approach. And Ike was inside every single detail, challenging every detail of making the movie. And it led to a fair amount of friction with the studio eventually. And for example, when we made Iron Man, there was a scene in Iron Man. It's the scene in which Tony Stark is hijacked, in which his convoy of Humvees was attacked, and he was captured.

And the original script called for, I think it was 10 Humvees. And Ike looked at that and said, why do we need 10 Humvees? That's too many. Cut the number of Humvees. It's too expensive. So we cut it back, I think, to three. Avi Arad, Marvel's chief creative officer So we cut it back, I think, to three. Avi Arad, Marvel's chief creative officer, who you met in the last episode, oversaw

the development of Iron Man. And he heard a lot from Ike. When we made our first movie on our own money, Iron Man, he was freaking out. He was sending the accounting guys to see what's going on. Then I get a call.

How come they have all this candy around the set? We pay them. They can buy their own candy. Ah, it was an education. For the record, Ike disputes the candy story. But he said he did believe the food catering on set was excessive. Ike's desire to spend as little as possible affected all aspects of production on Iron Man. So when the team in Los Angeles started hiring people to make the movie,

they couldn't exactly go to the A-list. We were newbies, you know, it was, we hadn't done a million pitches, but I mean, thank God we didn't realize what we were pitching for in the grand scheme of things, right? That's Art Markham, who was hired to write the Iron Man script with his writing partner, Matt Holloway. Matt said he knew Marvel Studios needed a hit. This had to succeed. Iron Man or the Hulk both really needed to succeed, and Iron Man really needed to succeed because it was also the question of, he doesn't seem like a second-tier character anymore, but it's like, who's Iron Man? For the uninitiated, Iron Man is the alter ego of Tony Stark, a billionaire businessman, playboy, and inventor. In the comics, he's kidnapped during the Vietnam War and forced to build weapons for the Viet Cong.

While imprisoned, Stark builds a suit that lets him fly and shoot lasers. He uses it to escape and becomes a high-tech superhero. Tony Stark's not a teenage boy who gets bitten by a spider, right? He's a grown adult. You know, he's a genius, but that genius has been used to do things that have hurt a lot of people. That's serious. You know, when we sort of dove into the source material and you sort of realized, like, my goodness, this is a sort of alcoholic weapons manufacturer. What an amazing character. It so intrigued us. But when you say that, it sounds like a very serious adult movie, right? Like, it doesn't sound like a kid's comic book movie. So I think there was

fear. I mean, there was fear. You know, like, is this going to work? Marvel hired Jon Favreau to direct. At the time, he wasn't exactly the first name that came to mind for big summer blockbusters. He had only three directing credits. His most famous was Elf, a Christmas comedy with Will Ferrell playing an overgrown man-child. Dad! I'm in love! I'm in love! And I don't care who knows it! Elf did not scream action. And his latest release, Zathura, a science fiction adventure film,

had been a flop. But Favreau had ideas on how to make Iron Man relatable and funny. Just as Sam Raimi had done with Spider-Man. To play Iron Man, Marvel considered numerous actors,

including Timothy Oliphant from Deadwood. But they kept returning to one name, Robert Downey Jr. He was an Oscar nominee skilled at drama and comedy. But at the time, he was at a low point in his career. Downey had struggled for years with addiction and had served time in prison. And those weren't the only factors that made him risky. I asked Marvel's longtime casting director, Sarah Finn, about him.

Downey was not an obvious choice for this because we saw this movie and I think everyone perceived it more in the action zone. Although he is an actor of the highest caliber, he wasn't known in the zone. I think he also an actor of the highest caliber, he wasn't known in the zone. I think he also wasn't at that time at a classic age where people would have looked to cast an action hero. And there were a lot of questions. Robert Downey Jr. was in his 40s, older than the average action star. But Sarah really wanted him. She thought he had charisma and was believable as the complicated Tony Stark.

I suggested having screen tests, knowing that that might be a cut through because it can be a bit abstract, right? When you're casting, you're trying to imagine what somebody's going to be like in the part. You're taking that leap in your imagination. If you can see it in front of you, it becomes undeniable. Tell me about what you remember about his audition, about his arrival. Downey came in absolutely ready to go. I believe he was singing, God, I Hope I Get It from Chorus Line as he walked in the doors. Nice, nice. And we were in a big soundstage, kind of cavernous, empty space.

You can watch the screen test yourself on YouTube. Done. You're still Buckingham Palace. What do we got? What do I got to break out the scion? But he walked in and just really filled the space and he was on fire. He was ready to go claim this part. There it is. There's a smile. It's okay. Yeah. So it's natural. Less muscles to smile. In that room, did you feel like, okay, this is it. It's okay. Yeah, so it's natural. Less muscles to smile. In that room, did you feel like, okay, this is it. It's right? Yes.

Gotcha. Instantly. Everything was falling into place. But the screenwriters, Art and Matt, said the Iron Man team was nervous, including Favreau.

John was sitting behind his desk, you know, and he was worried every single day. And he was like, we'll make a hundred million, right? Right. And that was not false modesty. That was fear.

Like that was a fear based question. And I'm like, oh my God, this is way more tenuous than I thought. So, yes, there was absolutely nobody, from my experience, pointing to the fences saying, this thing's going to be amazing. It was like, I hope we can make it. I hope it makes $100 million. And I hope we all get to work in this town again when it's all said and done. Coming up, Iron Man heads to the box office.

And Ike Perlmutter gets courted by a very surprising suitor. Need a great reason to get up in the morning? Well, what about two? Right now, get a small organic fair trade coffee and a tasty bacon and egg or breakfast sandwich for only $5 at A&W's in Ontario. 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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Bacardi, its trade dress and the bat device are trademarks of Bacardi and Company Limited. Rum, 40% alcohol by volume. And this is some footage, about four minutes of footage that was cut together just for Comic-Con. This was made for you guys, the people who know who Iron Man is. just for Comic-Con. This is made for you guys and people who know who Iron Man is. That's Iron Man director Jon Favreau at the 2007 San Diego Comic-Con, giving a sneak peek of the movie

to a big crowd. This is not about trying to get people to go see the movie who don't know who Tony Stark is. This is about comic book fans who want to see how we handle the material if we stay true to the books. Fans who had been skeptical

about Marvel making its own movies were suddenly excited. This was the Iron Man they knew and loved from the comic books. A blend of action and comedy. In the movie, Robert Downey Jr. captured the character's struggles, charm, and snark.

You've been called the Da Vinci of our time. What do you say to that? Absolutely ridiculous. I don't paint. And what do you say to your other nickname, the Merchant of Death? That's not bad. Iron Man, Marvel's first self-produced film, opened in May of 2008. Its premiere was such a big deal that Ike Perlmutter agreed to fly out from New York. But he didn't want to have to talk to the Hollywood crowd,

so he wore a disguise, a trench coat, a hat, and a fake mustache, which, and I'm not making this up, he accidentally put on upside down. Critics loved Iron Man, and so did moviegoers. Iron Man turned gold over the weekend with a $100 million take. The film had the 10th biggest opening of all time. The film grossed nearly $600 million. Its budget was less than $150 million. It made a lot of money. Things were changing inside Marvel. There was increasing tension between Avi Arad and David Maisel. Eventually, Avi left to become an independent producer. Soon after, David replaced him as chairman of Marvel Studios.

David said Iron Man was so successful, even Ike Perlmutter was willing to spend a little money to celebrate. I remember calling Ike and saying, I thought we should get Jon Favreau and Robert Downey presents, get them new cars. And he agreed. Wow. I think Favreau wanted a Mercedes, certain Mercedes, where his wife thought he would like it, in certain color. And Robert wanted a Bentley in a certain color. And Robert wanted a Bentley in a certain color. Because I remember when, I think it was the night we went to Mr. Chow's, we played a trick on John and we had the valet, the valet brought up the Mercedes.

And then he was so happy. And then it was really funny because Robert was happy too. But then we could tell he's probably wondering like, where's my car? And we made him wait a few days, but we brought it to his house one afternoon where I think he was taking a nap or something. And we parked in his driveway so that when he woke up, he saw his new car. And I think that spirit of fun, which I think a lot of people might be surprised

that I supported that, but he did. The degree of Iron Man's success at the box office caught a lot of people at Marvel by surprise, including General Counsel John Tritzen. After Iron Man's success at the box office caught a lot of people at Marvel by surprise, including General Counsel John Tritzen. After Iron Man was released, we were stunned, at least we in New York were stunned, by the success of the movie at the box office. And we said, wow, these movies are actually going to be popular, popular on their own and can make money on their own. Wow. And did you actually sell as many toys as you expected? money on their own. Wow. And did you actually sell as many toys as you expected? No, we didn't. It's interesting. We didn't because licensees were skeptical about Iron Man as a character.

And it ended up after the movie came out and it was popular, those same licensees started chasing Iron Man because they didn't have enough product on their shelves. Marvel Studios was on top of the world. Well, almost on top. It was number two, actually, behind this movie. A much grittier take on the superhero genre. What do you propose? It's simple. We kill the Batman. The Dark Knight, the second film in Christopher Nolan's Batman trilogy, came out in July of 2008, two months after Iron Man. The DC Comics movie grossed $1 billion.

It was the biggest film of the year. And it couldn't be more different than Iron Man. It wasn't witty and light. It was grounded and dealt with intellectual themes. Some men aren't looking for anything logical, like money. They can't be bought, bullied, reasoned, or negotiated with. Some men just want to watch the world burn. The Dark Knight was nominated for eight Oscars and won two,

including Best Supporting Actor. And the Oscar goes to Heath Ledger in The Dark Knight. And the Oscar goes to Heath Ledger in The Dark Knight. Iron Man got two Oscar nominations for sound and visual effects. It didn't win either. Here's David Mazel on how he saw Marvel's competition with DC. I was afraid of DC, and their model was hiring final cut directors, and sometimes that works, and you get a Chris Nolan movie, and sometimes it doesn't, right? David did not want to give too much power to individual filmmakers like Nolan.

He had a different philosophy for Marvel. This was a team effort, and the producers was Marvel Studios and is Marvel Studios. And we needed directors and writers and talent that wanted to be part of a team and a culture. But handing over the keys to a Final Cut director, I don't know how as a producer that is a fiscally or creatively responsible decision. Marvel Studios would give ultimate power to its executives, who also served as producers, like David. To compete with DC movies like The Dark Knight, Marvel would have to build on the success of Iron Man. David had an idea of how to do that.

He decided to explore whether he could sell Marvel to the biggest company in Hollywood, Disney. It turned out Disney had already been thinking about Marvel. Tell me about the first time to either of your recollections that the idea of Marvel as a, you know, company that Disney could buy came up. Marvel had been on Disney's radar, our radar screen for quite some time. That's Tom Staggs. He and his business partner, Kevin Mayer, are former top executives at Disney. We actually did a study, a strategy piece called Disney 2015, which in 2005 sounded very forward-looking, but it's a little odd now. And part of that was looking

at what acquisitions would make sense for Disney, and Marvel was part of that equation. We put together some, I think, pretty compelling analysis as to how Marvel would be worth a lot more as part of Disney than it was as a standalone company. Although, interestingly enough, Marvel wasn't necessarily seen by everyone inside Disney as a natural fit at first. We saw it as being highly complimentary, and it took a little bit of doing with some of the folks

to try to get people excited. What was their objection or concern? I think it had more to do with the nature of the content. It was a little more action-oriented. Yeah, there's that. There's also the notion, which made sense a bit, why would you buy a comic book company just to get a bunch of characters? You can make up

characters. We're Disney. Why can't we just develop characters? Disney declined to comment. David, who used to work at Disney, approached its CEO, Bob Iger, in early 2009. I remember standing outside the Team Disney building. I brought in the Marvel Encyclopedia for Bob. So anyone who saw me walking into Team Disney that morning could have figured it out,

and made some money probably in the stock. it out, but, you know, and made some money probably in the stock. The Marvel Encyclopedia had information on thousands of characters, proof that there was a lot more than Iron Man that Disney could mine. But one very important person didn't know what was going on yet. David hadn't told his boss, Ike Perlmutter, that he was having this meeting. After finding out Iger might be interested, David nervously dialed Ike up. He was standing in a parking lot outside Disney's executive building, which features huge statues of the seven dwarfs holding up the roof.

I remember looking up the seven dwarfs and calling Ike and telling him about my meeting, and I thought there'd be three answers. Either he'd say, you're fired for having that meeting without telling me. Two, he'd say, go back to work and finish up Iron Man 2. Or three, come to New York. And he said, come to New York. Come to New York, meaning come to Ike's office. Because Ike was not mad that David had approached Disney about a sale. Ike was intrigued. Soon, he and Iger had their first meeting in New York in the summer of 2009.

John Turitzen has a vivid memory of the moment. I remember, I remember very clearly, Ike Perlmutter walked down the hall to my office, and he said he was meeting with Bob Iger. Bob Iger wanted to come to his office to meet with him about possibly buying or doing a deal with Marble. After the meeting was over, Ike walked down the hall to my office, and he opened the door and he said, Can you believe? He said, Can you believe they're serious about maybe buying Marvel? Ike had no interest before that time, no interest at all in selling Marvel or losing control of Marvel. He loved running Marvel by himself.

But he said, I like this man. He said, I like him. I think I could work with him. Then that night, Bob Iger and his wife went to dinner with Ike Perlmutter and Ike Perlmutter's wife, and they continued the conversation to get comfortable. And Ike became very comfortable with Bob Iger. Was it also important to Ike that he would retain some level of control over Marvel? Yes, it was very important. Ike loved running Marvel. It was very important for him to stay in control and run Marvel.

And so when we were negotiating a deal with Disney, we had an addendum to the merger agreement. It wasn't legally binding, but the basic idea was that Marvel would remain autonomous and that Ike Perlmutter would be able to control Marvel. Disney agreed to buy Marvel in August of 2009 for $4 billion. Ike Perlmutter received a combination of cash and Disney stock worth about $1.6 billion at the time. And, he told us, Iger personally promised him that he would remain in charge of Marvel as part of Disney. Here are former Disney executives Tom Staggs and Kevin Mayer again. I remember well, we announced it on a Monday, I think. And of course, their stock, and it was a, you know,

29 or 30% premium to their stock price. And their stock obviously shot up. Ours actually went down that day. We went down two or 3%. Oh, we were accused of overpaying dramatically. I got more than a few calls, actually. Are you kidding me? It's a comic book company and $4 billion. And we read it at our mantra and said, we really think that there's real value here.

When the deal was closed with Ike and David, was there some kind of celebration or meeting of everybody? There was a meeting, a big all-hands meeting in the then-New York offices they've switched since then. I remember the air conditioning wasn't working. It was really hot. We had to open the window. It was tough. It was a tough meeting, but it was fun. I went to some Marvel offices a few years ago.

I was struck by, given what a successful company they are, it was a very austere office. Ike's very austere and parsimonious, even. He did not spend extra dollars at all. I mean, look, he did take it out of bankruptcy. He put the company on the footing that allowed it to be sold for $4 billion. So hats off to Ike.

David Maisel left Marvel Studios after the Disney acquisition, over $20 million richer. The person who stepped into David's shoes was Kevin Feige. Feige had worked his way up at Marvel, first as a junior executive who carried Avi Arad's bags to meetings,

then as a producer on Iron Man. Now, Feige was the head of the whole studio under Ike Perlmutter, and he was tasked with making Marvel's next batch of movies. With Disney's resources, Feige moved forward with a bold strategy that no studio had done before, to link all Marvel's movies into one connecting storyline, a cinematic universe. And I know that a lot of us,

including Kevin, that was the goal, is can we manifest this crazy dream all the way to an Avengers movie, which seemed impossible at the moment, both technically and, you know, just seemed crazy. It was a strategy that would fuel superheroes' takeover of Hollywood.

That's next time on With Great Power, out tomorrow. Rose takeover of Hollywood. That's next time on With Great Power. Out 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 Lisa Wang, with help from Alan Rodriguez-Espinoza,

Matt Kwong, John Sanders, and Pierre Singhi. The series is edited by Catherine Brewer and Annie Baxter. Fact-checking by Nicole Pasulka and Amelia Schaunbeck. Sound design and mixing by Griffin Tanner. The music in this episode is by Bobby Lord, Griffin Tanner, Peter Leonard,

Audio Network, and Epidemic Sound. Our theme music is by So Wiley and remixed by Nathan Singapak. Special thanks to Maria Byrne, Kate Leinbaugh, Jessica Mendoza, Sarah Platt, Sarah Rabel, Ethan Smith, Catherine Whalen, and Veronica Zaragoza. Thanks for listening. Check out episode three tomorrow. When did you sort of start to understand, oh, this is something, this is a cinematic universe. This is something different. Yeah, it was around the time that we were doing Cap and Thor.

Kevin mentioned something about the Avengers. Okay. That really blew my mind because these other films, again, weren't known characters. Captain America was not exactly cool at the time. Thor was not as widely known outside of the hardcore fans. And so it

seemed very gutsy to be planning an Avengers movie before we even knew how these two were going to be received.