The movie "Iron Man" debuts May 2 with some big Hollywood names. Robert Downey Jr. plays millionaire Tony Stark turned superhero with Gwyneth Paltrow by his side, and the film is directed by John Favreau, but the real star of the movie may be investment bank Merrill Lynch & Co., which provided financing for the project.
The New York-based investment bank backed the film with a nonrecourse loan to Marvel Entertainment Inc., which is part of a $525 million credit line signed in 2005. The loan won't be recorded on Marvel's balance sheet, and should losses happen they won't come out of the company's earnings, according to BusinessWeek. That seems like a pretty good deal for a company that came out of bankruptcy, slowly making a resurgence from a merger between Marvel Entertainment and Toy Biz Inc. in 1998. But nothing comes for free. In exchange for the loan, Marvel had to mortgage some of its content in the form of characters. So, if the deal goes bad for Marvel, Captain America could be playing superhero for another studio.
The movie cost $150 million to make, according to CNBC. With that cost in mind and the source of funding, director Favreau says he took artistic risks cognizant of the business behind the making of the movie: "You have to understand what the business people need to support the artists. ... There's always been that balance between art and commerce. Even the ceiling of the Sistine Chapel was commissioned by the church," Favreau said.
If even a fraction of the people who go to view the Michelangelo masterpiece watch "Iron Man," credit-plagued Merrill Lynch can rest assured it will get back its Hollywood investment, paid in full. - Gerald Magpily
Inside The Deal: Linklaters' Schmidt says how regulators handled Pfizer Inc.'s acquisition of Wyeth is an outlier of how others merger reviews will be conducted.
this is a GE investment actually....GE bought the group from merrill several months ago. nice research for your article.