Why Is Marvel in Trouble? Discuss the Performance of Marvel Leading up to the Filing for Chapter 11

1. Why is Marvel in trouble? Discuss the performance of Marvel leading up to the filing for Chapter 11

Since Perelman acquired Marvel, it had successfully diversified the from the comic book business into Sports and Entertainment Cards, Toys, Children’s Activity Stickers, Publishing, Confectionery and Consumer Products and Licensing. Despite been a well-diversified company, the problems that affected the sales of the comic books, also affected the other sectors of the company. For example one of the main problems was that the contraction in sales was primarily driven by the disappointed collectors who had seen the comic books as a form of investment. Like the comic books, the Sports and Entertainment Cards consumers were mainly collectors as well. The other segments of the company also relied upon the success of the comic book characters. So despite been a diversified business, many segments targeted the same consumers and others were interconnected between each other.

The entertainment and sports cards business also struggled due to strikes in baseball and hockey, and many of the consumers were shifting to other sources of entertainment.

The company apparently grew under Perelman management, however the Comic book business was already slowing down and they were overproducing before the expansion and diversification started. The growth of the business in a way masked the comic book segment that was already declining.

2. Evaluate the new restructuring plan. Will it solve the problems that caused Marvel to be in financial distress? If yes, how? If not, why not?

The restructuring plan consisted of a capital injection and the acquisition of Toybiz in order to generate positive cash flow. If we consider that the main problems were the losses incurred in the comic book business and the sports and entertainment cards due to the competition in other forms of entertainment.