Monday, April 28, 2008

Comic Wars: Book Review

This review appeared in Barron's on June 3, 2002.

If anyone decided to pattern a cartoon villain after Dan Raviv's depictions of Ronald Perelman and Carl Icahn in Comic Wars, the concept would be laughed out of the marketplace.

After all, riveting cartoon villains usually have at least one redeeming feature.

But in Comic Wars, CBS News correspondent Raviv spins an irresistible morality play: Allied against the forces of darkness -- duplicitous bankers, profane lawyers, spineless yes-men, and Perelman and Icahn -- Israeli immigrant and Six-Day War veteran Isaac (Ike) Perlmutter arrives in America with $250 to his name. Thirty years later, he's worth $500 million.

Raviv portrays Perlmutter's triumph as a victory of the will to do the right thing. The ultimate entrepreneur, who could make brains and sweat work where others needed money, Perlmutter first built a fortune buying and selling surplus goods. This success allowed him to take on larger operations -- including whole firms -- like shaver company Remington Products.

The comic-wars part of the saga begins in 1989 -- when Ron Perelman acquires Marvel Entertainment Group for $82.5 million, hyping the company as a "mini-Disney," and floating more than $900 million worth of junk bonds. Then, he train-wrecks it, in a DotCom-like meltdown: Based on unrealistic hype about revenue growth, Marvel's stock soars from its $2 IPO price in 1991 to more than $34 in 1993 -- in part fueled by bankers who didn't look too carefully at their deals so long as they made their ample underwriting fees.

Perelman grossly overpays for a series of disastrous acquisitions. And his cost-cutting disembowels the staff of artists and writers. As quality plummets, so do sales, helped by a boycott of Marvel by disillusioned fans -- and a decision to create a distribution monopoly that drove many of its best retailers out of business.

Meanwhile, Perlmutter, who had bought a crippled toy firm in 1990 and renamed it ToyBiz, teams up with Ron Perelman in 1993 -- in a deal giving ToyBiz the right to sell action figures based on Marvel Comics' characters (Spiderman, X-Men). The no-royalty deal cost Perlmutter 46 percent of his company -- and bound his fate to Marvel. When Perelman took over Marvel, it had had a 70% market share. But by 1996, it was 25%. And the share price had plunged toward $1 by the time the company filed for Chapter 11 on Dec. 27, 1996. "The great Ron Perelman," Raviv writes, "the man who ... conquered Revlon, was now a schmuck who could not run a comic-book company."

Corporate raider Carl Icahn launches his hostile takeover attempt for Marvel in November 1996. All he'd ultimately accomplish was an exchange of toxic insults with Perelman. But with the moguls distracted, Perlmutter executes a courageous maneuver: On July 31, 1998, he takes control of Marvel, scoring one of the most impressive victories since David slew Goliath. The story of how he pulled off this acquisition is a nail-biting thriller -- filled with more backstabbing, lies, broken promises and unexpected twists than a stack of action comic books.


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