Jewish Journal


May 16, 2002

Caped Crusaders

How two Israeli entrepreneurs battled Jewish American businessmen and brought "Spider-Man" to the silver screen.


The $114 million opening weekend for the release of "Spider-Man" on May 3 was not only a box office record breaker but a resounding triumph for two wily Israeli entrepreneurs.

In his new book, "Comic Wars," journalist Dan Raviv details the dramatic battle of Revlon CEO Ronald Perelman, financier Carl Icahn and the two Israelis, Ike Perlmutter and Avi Arad, who toppled both Perelman and Icahn from the throne of Marvel -- home to such legendary characters as the Incredible Hulk, the X-Men, Captain America and, of course, Spider-Man -- rescued the company and brought it roaring into the 21st century as a major media force.

Perlmutter and Arad had owned a company, Toy Biz, which manufactured memorabilia based on Marvel's characters. When Perelman bought Marvel comics in 1989, Perlmutter was convinced that Perelman's business savvy would bring Marvel to new heights. Instead Perelman brought Marvel to its knees with a crushing $600 million of debt, while, according to Raviv, Perelman pocketed nearly $280 million by selling junk bonds off of Marvel's previously profitable enterprise.

The largest buyer of those junk bonds was Carl Icahn, who was later awarded temporary stewardship of the company by a bankruptcy court. When Icahn's leadership failed, Perlmutter and Arad kicked into high gear and transformed Marvel Entertainment into Marvel Enterprises -- a company that now has four films in production with such stars as Halle Berry, Jennifer Connelly and Ben Affleck.

The son of Israeli immigrants, Raviv has been a reporter with CBS since 1976, stationed in Miami, New York, Tel Aviv and London and is currently posted in Washington, D.C. The author of three previous book on Israeli politics, including "Every Spy a Prince," about the Israeli intelligence community, he sat down with The Jewish Journal to discuss "Comic Wars" and the fall and resurrection of Marvel.

The Jewish Journal: Previously you've written about Israeli politics, why did you want to write about comic books?

Dan Raviv: I was resistant at first, because I never thought of myself as a business reporter, but I kept running into people who had worked on the case, and I was just very taken with the story. The decisive factor was when I heard that two Israelis had won the battle [to head Marvel comics]. Because all of my books have involved Israelis, Israelis in America who've taken over a comic book company was just too good a story to pass up.

Journal: What was Marvel's business situation before they were bought by Perelman in 1989?

Raviv: They were getting along as a small company, but it was only a small profit business. It's unclear, however, if without a big money person behind them, that Marvel would have survived. They might have been too small for our modern media age. The Perelman people have since said it was always a bad business and their mistake was not realizing it sooner. Comic books are very small and are largely dependent on the whims of collectors.

Journal: How did Perelman drive Marvel into the ground? Is it a classic story of noncreative people running a creative enterprise?

Raviv: That and over expansion and too much borrowing. The ways that he chose to expand Marvel weren't the most sensible. He bought baseball and trading card companies to increase the company's attractiveness on Wall Street but kept on rejecting movie proposals. For example, Stan Lee [Spider-Man's creator] brought him a property he wanted to develop for film and was told, "You don't understand. Perelman doesn't want to make movies."

With movies you have a long lead time, and the chances of hitting it big are uncertain, but if you care about the characters, it makes sense to develop them in new media formats. Skip ahead a decade, and the idea of putting the characters in the movies seems brilliant.

Journal: How was Marvel rescued?

Raviv: Perelman failed, and Marvel had to file for bankruptcy. Then Icahn -- who was the largest buyer of Perelman's junk bonds -- tried to head the company for less than six months. A court-appointed trustee then had to decide around 1997-1998 whether the company should live or die.

That's when Perlmutter and Arad kicked into high gear. They had tried to work with Perelman and then Icahn, but when it was clear that the trustee's decision meant life or death for Marvel [and thereby for their own company which was dependent on licensing Marvel's characters], they wooed the banks to go with them, which is what you have to do in bankruptcy proceedings. When the banks are satisfied, generally the judge will be satisfied.

On erev Rosh Hashana, Ike and Avi spoke to an assembled meeting of the bankers to plead for Marvel's survival. Avi said, "Don't sell this company to Icahn on the cheap! Spider-Man is worth a billion dollars." It turned out he was right! The banks came around, and by early 1998, Toy Biz took over Marvel Entertainment and renamed it Marvel Enterprises.

Journal: Why were Arad and Perlmutter able to rescue Marvel?

Raviv: They have that Israeli persistence and stubbornness. Arad wants to protect the characters, and Perlmutter wants to protect the money. Avi loves the Marvel characters and considers them his "children." Ike doesn't read the comics or go to movies, but has a keen attention to details. Ike Perlmutter pays attention to every business detail, and he totally trusts Arad with the creative details.

Journal: What is the future for Marvel?

Raviv: "Spider-Man" is proof of their victory, but only the beginning of Marvel's new life in Hollywood. The company was around since 1939 and these two guys took it to a new level. It's only now graduating into a new level of media exposure. "Spider-Man" is only the beginning.

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