"Iron Man 2" packs a punch for Disney

Wed May 5, 2010 5:22pm EDT
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By Sue Zeidler

LOS ANGLES (Reuters) - "Iron Man 2," the first big Marvel superhero film to open since Walt Disney Co's $4 billion purchase of the studio, should pack a $200 million to $300 million profit punch for Disney, analysts said.

While Viacom Inc's Paramount Pictures distributes "Iron Man 2," giving it a fee of 8 to 10 percent of box office revenue under a deal made before last year's acquisition, Disney unit Marvel Studios gets a share of the profits and benefits from some merchandising and product tie-ins.

Financial analysts, many of whom believe Disney paid a full price for Marvel, are tracking the movie's success closely to see how the acquisition of Marvel comic characters might benefit the company in the long term and unlock value for its other businesses, such as its theme parks.

"The biggest benefits will come when existing agreements for consumer licensing and distribution expire, but I think Disney will make close to $300 million on this over the life of the film," said David Bank, analyst with RBC Capital.

Tony Wible, analyst with Janney Capital Markets sees Disney earning about $200 million in profits from the box office and merchandising, net of licensing fees, and from other sources like movie plug-in product placements by companies like Oracle and Burger King.

"The logic behind this acquisition is to build the brand upon a global scale. We expect this film to be highly profitable given that Marvel generally runs a very lean budget," he said.

Box office watchers expect "Iron Man 2," which opens in the United States and Canada on Friday, to rake-in over $600 million around the world by the end of its run, which could prove conservative, given last summer's big hit, "Transformers: Revenge of the Fallen" earned $836 million worldwide.

The first "Iron Man," which stars Robert Downey, Jr. as a weapons maker who manufactures a high-powered and lethal suit of armor, made $585 million worldwide in 2008.   Continued...

<p>(L-R) Cast members Mickey Rourke, Scarlett Johansson, director Jon Favreau, Robert Downey Jr, Gwyneth Paltrow and Don Cheadle pose during a photocall for the movie Iron Man 2 in Los Angeles, California April 23, 2010. REUTERS/Gus Ruelas</p>