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Paramount extends deal with Marvel

It will take a smaller distribution fee than it got for 'Iron Man' but will gain global rights to five films.

September 30, 2008|Claudia Eller | Times Staff Writer

After the success of this summer's blockbuster "Iron Man," Paramount Pictures and Marvel Studios have extended their distribution deal for five more movies.

Under the agreement, Paramount will take a smaller distribution fee from Marvel -- 8% rather than the 10% it had received for releasing "Iron Man" -- in exchange for gaining worldwide distribution rights to the pictures. Paramount, which released the action movie in the U.S., Canada and some overseas territories, will also now distribute Marvel's films in such key markets as Japan, Germany, France, Spain, Australia and New Zealand.

Previously, Marvel had licensed distribution rights to local distributors in those territories. Paramount will distribute "Iron Man 2," due out May 7, 2010, worldwide with the exception of Germany, where the sequel was already committed to a local distributor.

The other films included in the newly extended Paramount pact are "Thor" in 2010, "Captain America" in 2011, "The Avengers," also in 2011, and "Iron Man 3," which does not yet have a release date.

Paramount Pictures Vice Chairman Rob Moore said the company agreed to take a lower distribution fee because it would get more films to distribute in a greater number of territories, which could be more lucrative for the studio.

David Maisel, chairman of Marvel Studios, a unit of publicly traded Marvel Entertainment Inc., said that given the success of "Iron Man," it made sense to continue the distribution pact with Paramount on "improved economic terms." By releasing through one worldwide distribution partner, Maisel said, Marvel believed that it could "maximize the upside" of its movies.

In a regulatory filing Monday, Marvel said it had received its first "Iron Man" check from Paramount in the amount of $60 million.

The company forecast revenue in its film production division of $125 million to $140 million this year, up from its earlier projection of $65 million to $80 million.

Marvel, which used to rely on studios to bankroll its movies, has been self-financing its pictures since securing a $525- million loan arranged by Merrill Lynch & Co. in 2005. In its filing, Marvel said it would fund 33% of the budget of each film covered by the new distribution deal and its film facility would provide the remaining 67%.

Maisel, who declined to divulge the cost of any individual movie, has told Wall Street analysts that the company's budgets range from $135 million to $165 million.

People familiar with "Iron Man" said the film cost about $150 million, excluding marketing costs.

"Iron Man" generated $574 million in worldwide ticket sales, and Paramount collected a distribution fee of about $60 million, according to a person familiar with the situation.

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claudia.eller@latimes.com

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