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Does the success of Avengers: Endgame change the dynamic with Sony and Universal
Posted by Labels: Disney, Marvel Studios, MCU, Sony Picture Entertainment, Universal Studios
The short answer is no, or rather not at the moment.
The long answer is complicated.
Sony Corporation looked at selling all or parts of Sony Entertainment for the better part of 18 months, when it became apparent that there were no viable buyers willing to spend what Sony considered an appropriate amount of money for any segment of the business it decided to move on.
As an aside a little birdie tells me there is still an interested party, but not for the entirety of Sony Picture Entertainment, but with no one willing to step up for the other segments of the business its looking like a non-starter.
Recently activist investor Dan Loeb, with the backing of his hedge fund, has been purchasing stock in Sony Corporation; the parent company to Sony Entertainment. Dan Loeb is vocal in his plan to divest (sell/spin off) aspects of Sony Corporation to increase shareholder value. As of April 20th his hedge fund was the largest single shareholder of Sony Corporation at 6%. Dan Loeb's plan calls for selling Sony Entertainment or spin it off as a new corporation separate from Sony, using the sale of the company (and or stock) to further fund the electronics segment of Sony Corporation.
Sony Entertainment is made of four distinct subsidiaries, Sony Pictures, Sony Television, Sony Music, and Sony Music Publishing. There is clearly not a buyer for the Sony Entertainment as a whole, but could Two or three of the subsidiaries be sold and the fourth spun off?
The other aspect of activist investors it puts increased pressure on the individual parts to be profitable, an asset rather than a liability as a whole. In calendar year 2019 Sony Pictures and Sony Television were profitable, I am not sure about the music side of the house. There is now pressure on those units to continue to be profitable, they cannot revert back into being a liability.
Here is a date to remember, Jun 18th 2019, Sony's next general stockholders meeting and vote to confirm the new board of directors, Dan Loeb is not currently a member. During general stockholder's meetings is when activist investors push their strategy. If Dan Loeb has enough support that when it will take place.
As indicated in Calendar year 2017 and 2018 Sony Pictures was profitable, even with a number of sub par box office performances, leading the way was Jumanji, Peter Rabbit, Hotel Transylvania 3, The Equalizer 2, as well as the Marvel Titles of Spider-Man Homecoming, Venom, and Into the Spider-verse. For Sony the problem with the Marvel titles is their profitability in comparison to their cost. Does Sony invest $200 Million (spread out over 24 months) to make $50 million in net profit in return?
As I have indicated previously Sony has put all their chips on the table and is waiting for anyone, well at least Marvel Studios (Disney) to do something.
Avengers: Endgame was the conclusion of Phase 3 (The Infinity Stones) storyline of Marvel Studios, while we have some idea of what comes next (cough Secret Invasion cough probably maybe). We also know that Avengers: Endgame will be extremely profitable, as it generated 550 million in revenue for Marvel Studios on $500 million dollar total budget in its first seven days of release. It's likely the film will generate another $500 million dollars profit for Marvel Studios.
In the end I believe the success of Avengers: Endgame puts more pressure on Sony to act. Financially I know the bean counters at Sony would tell you it's better to pull out of the deal (not renegotiate) the deal with Marvel Studios but it would be a PR nightmare, potentially sinking one or two movie before recovering. Is Sony ready for that PR nightmare?
I would not be shocked to hear more rumors that Sony and Marvel are discussing a sale of the Marvel Properties (including Men in Black) during mid to late summer as Dan Loeb's supporters become more agitated. However until Dan Loeb or another activist investor gets enough shareholder support a sale is not going to happen.
My view is Sony will begrudgingly agree to a new crossover deal with Marvel and Marvel will get more creative control of the live action Spider-Man universe allowing all of the Sony Spider-Man universe characters to be in the shared MCU universe.
Universal Pictures
Universal still has the rights to release movies with the Incredible Hulk and Namor. Hasn't changed as their agreement doesn't have similar clauses requiring Movies be in active production.
Universal Pictures is owned by NBCUniversal which is owned by Comcast. To put it bluntly the CEO of Comcast, Brian Roberts and the CEO of Disney, Dave Iger, don't like each other and have actively competed against one another on numerous fronts over the past decade.
In 2019 Disney sold Comcast their share of Sky Network and NBCUniversal is working with Disney to sell NBCUniversal share of HULU streaming service to Disney. That is something that a year ago I would not believe to have been possible. It's like a earthquake along the coast of Africa that everyone has been waiting for.
I am guessing their is an expanded agreement in place allowing the use of not only Hulk and the associated characters in his IP to be used by Disney, but a further agreement for Namor to be used as well. The real question is Disney writing NBCUniversal a check to take the rights back or is it just an expanded use agreement?
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