Marvel Comics: The Untold Story

by Sean Howe

  Over in that other, non-Marvel, comic, Gerber pulled a switcheroo. “They haven’t got any friends over there! They’re comin’ with us!” shouted Destroyer Duck as he grabbed Howard and Beverly from the melee. “Anyhow, one of the clones ran out that way. They’ll never know the difference!”

  In effect, Howard and Beverly had been rescued from the Marvel Universe, replaced by imposters. In the remainder of Savage Dragon/Destroyer Duck, Gerber’s beloved creations were put into a witness protection program. “They’d never know me back on the ol’ plantation,” says Howard, now sporting eyeglasses and green-dyed feathers. He and Beverly Switzler take the names Leonard and Rhoda Martini, and head for Buffalo, New York, far from Marvel’s clutches.

  Months later, Gerber was sending out emails about the “Howard the Duck Death Page” that he’d posted on AOL. “That page contains my final word on the subject,” he wrote, “until Savage Dragon/Destroyer Duck comes out. As I’ve been telling people: There’s more than one way to skin a duck. Dragon/Duck illustrates Method #2.”

  Brevoort was furious at Gerber’s deceit and certain that he’d lose his job for allowing it to happen. When confronted, Gerber explained that Brevoort had simply been “in the way of the gunfire.” The editor, who said he’d always considered Gerber a “bastion of moral integrity and moral fiber, the little guy fighting the man,” vowed to never work with Gerber again. “He decided that me and my life and my family, we’re perfectly acceptable collateral damage to the larger point that he wanted to make,” Brevoort concluded, years later.

  Savage Dragon/Destroyer Duck was met with audience indifference and low presales. Gerber, heartbroken, offered to fax the twenty-page plot to retailers, but when the comic finally shipped, months late, nobody noticed.

  Mark Gruenwald put his game face on and tried to raise morale, but coworkers noticed that even he was keeping to himself more than usual, his attentions seemingly elsewhere. He’d always been organized; now he became fastidious, straightening shelves and rearranging the office library. On a writer’s retreat in Long Island, the team leader, the constant cheerleader, was uncharacteristically quiet as his friends joked with him.

  “He loved the Marvel Universe and the characters and the publishing profoundly, but he loved the people more,” said Tom Brevoort. “There were cases where a title under his purview really needed a change if it was going to recapture any sort of an audience, but in doing so, that was going to put some writer or artist out in the cold. Mark resisted doing that for the longest time because he just didn’t have the heart to do it. And then when he had no choice but to do it, it haunted him.” Former Marvel editor Mike Carlin, one of Gruenwald’s best friends, offered him a job at DC Comics, but Gruenwald felt too invested in the company he’d helped to build over the past twenty years.

  Before Gruenwald left for his weekend home on August 9, he grabbed a preview copy of Rob Liefeld’s Captain America #1. It was Gruenwald’s favorite Marvel character; until a few months earlier, he’d either written or edited every issue since 1982. On Monday morning, rumors started flying around the offices, confirmed by an 11 a.m. email from Terry Stewart. “It’s with my deepest and most profound regret that I inform you that Mark Gruenwald passed away unexpectedly early today at home,” the note began. The cause of death was a heart attack. A collective shock ran through the building, and, via phone calls, to freelancers throughout the country. One former colleague collapsed upon hearing the news. “It can be said without reservation,” the email concluded, “that Mark embodied the spirit of what we like to think Marvel is and should be.”

  Gruenwald was forty-three years old, a nonsmoker who exercised regularly. But over the last year he’d been in the position of removing dozens of freelancers from titles and seeing his longtime colleagues put on the street. Those closest to Gruenwald had no doubt that Marvel’s disintegration was one of the reasons for his death. In the words of one friend, “He was so attached to that place, and it had stopped being what it once was, and what he had worked so hard for it to be. It took the soul out of him.”

  Against all odds, things had gotten even worse at Marvel—“Mark’s death just seemed to symbolize the collapse of the whole place,” said one former editor. But rather than address the crumbling of the core business, the Perelman regime continued to focus on inflating the company’s paper value. Before Marvel CEO Bill Bevins retired, due to his own heart trouble, he made a move to replace Jerry Calabrese, who’d only been president a year. David Schreff, a clean-cut former president of marketing at the NBA, succeeded Calabrese. And when Bevins stepped aside, Schreff had a new boss: Scott Sassa, a thirty-seven-year-old, Hollywood-connected whiz kid from Turner Entertainment Group. Although Sassa spent more time in the Marvel offices than the haughty Bevins had, his focus was on moving the company’s characters into other media—clearly, the comic books weren’t making much money. Sassa drew up plans for theme restaurants and Internet initiatives.

  “All of the outside executives that were brought in after Stewart and Calabrese thought that they were joining Disney, that the Marvel brand was much more ubiquitous than it really was,” said sales director Matt Ragone. “Marvel was not Disney. The characters have edge; the stories have violence. But they counted the number of characters and changed the tag line of all press releases to say that Marvel owned 2,000 characters, because they wanted to leverage the entire character library. Well, the reality is that only a handful of these characters—The Hulk, X-Men, Spider-Man, Captain America, Iron Man—had any identity to the general population.”*

  It was too late, anyway. After posting third-quarter losses, Marvel’s public debt—$1.2 million in junk bonds, about 50 percent more than the stock value of the company—was downgraded, and stocks dropped. Wall Street experts expected a cash infusion from Ron Perelman, who’d just lined his pockets selling New World to Rupert Murdoch for $2.5 billion. “MacAndrews & Forbes is not going to sit by and allow its investment to slide into bankruptcy,” an analyst said of Perelman’s holding company.

  After discussions with Ike Perlmutter and Avi Arad, Perelman finally presented a recapitalization plan: Marvel would pay $22 a share to purchase Toy Biz (Perlmutter and Arad would get $200 million and $60 million, respectively, plus bonuses); then 410 million new shares of the merged company would be printed and sold to Perelman for $350 million. The trouble with this plan, of course, was that the millions of new shares (which Perelman would purchase at a bargain price of 85 cents each) would dilute the company stock by 80 percent. And it wasn’t just stockholders who were aghast; shares in Marvel had also been used as collateral to bondholders. Within days, stocks dropped again, and shareholders filed lawsuits against Perelman.

  At the end of the week, Scott Sassa—who had been on the job for less than a month—announced another staggering round of layoffs. A third of the remaining 345 Marvel employees were cut.

  Reports surfaced that one of Perelman’s advisors had quietly met with major bondholders, who dumped their investments only days before his controversial recapitalization announcement; lawsuits followed.

  There was another major bondholder, though, who didn’t get a warning. Carl Icahn, like Perelman, was a corporate raider with ties to Michael Milken; he’d been one of the inspirations for the character of Gordon Gekko in Wall Street. If anyone was less abashed about grabbing for money than Perelman, it was Icahn, an abrupt, high-stakes gambler. Once, when asked during a congressional hearing why he’d instigated a hostile takeover, he’d responded, “Do you ask Willie Mays why he jumped a certain way for a ball?”

  Now Icahn aimed to use his position as the chief bondholder (he owned nearly a third of the debt) to block Perelman’s plan. And if Marvel defaulted on its bank loans, the bondholders could collect the collateral—a substantial number of (undiluted) shares. Icahn could take over Marvel.

  There was an escape hatch for Perelman, however: if Marvel declared bankruptcy, the court might rule in favor of his Byzantine recapitalization plan; he wouldn
’t even need the approval of the bondholders. On December 27, 1996, Perelman’s various holding groups, set up like Russian nesting dolls, filed for Chapter 11 protection in Wilmington, Delaware: Mafco Holdings, which owned MacAndrews & Forbes, which owned Andrews Group, which owned Marvel III Holdings, which owned Marvel Parent Holdings, which owned Marvel Entertainment Group and Marvel Holdings.

  For the fourth quarter of 1996 alone, Marvel posted losses of more than $400 million. Some bar mitzvah.

  At the beginning of 1997, as fleets of lawyers were shuttling from New York to bankruptcy court in Delaware, Scott Sassa and David Schreff brought in Shirrel Rhoades, a veteran of the magazine world, as vice president of publishing. Rhoades was assigned two immediate tasks, both of which involved undoing actions by previous administrations.

  One was to pull the plug on Heroes World. Marvel quickly laid off all fifty-seven employees and announced an exclusive deal with Diamond Distribution, which would now have a virtual monopoly on all comic book sales. Marvel’s foray into self-distribution had not only been self-sabotaging; it had also upset the balance of power throughout the industry.

  Rhoades’s second mission was to fly out to California and tell Jim Lee and Rob Liefeld that Marvel was canceling the “Heroes Reborn” experiment. Liefeld had seen the writing on the wall when, on a trip to New York, a pair of Marvel editors smugly reminded him that the executives who’d decided to hire him were no longer at Marvel. Although sales had increased, the degree of improvement couldn’t justify the high fees. Marvel was also tired of Liefeld pushing deadlines. “The only way he’d give Marvel the pages of each issue,” Rhoades recalled, “was by flying a guy to New York with instructions not to turn over the disk of finished material until we handed him a check—something like a hostage exchange. I would hold out the check, he would hold out the disk.”

  Marvel wasn’t the only company displeased with Liefeld. The Image fraternity had fractured the previous year, after Todd McFarlane had vocalized his disapproval of Lee and Liefeld’s return to Marvel. (Even Frank Miller, who’d practically been Image’s patron saint, said he “felt like I’d made a fool of myself by standing up for those guys.”) Then, amid allegations that Liefeld was poaching talent from his partners’ studios and not paying employees, the other six cofounders told Liefeld over a conference call that he was going to be ousted from the company.

  McFarlane’s thick Canadian accent droned over the speakerphone. “Uh, in case we’re doing something illegal here, you know, then we’ll come back and do it again, but uh, we don’t like you no more, and we’re kicking you out of the company, and do I hear anybody disagree with me? And if I don’t, then let me take a formal vote. . . . Okay, bye, is that it? Anybody else got anything to say? Nope? Okay, good-bye.” The line went dead. Liefeld was out.

  McFarlane went on to rant about his former sidekick in interviews. “Over my dead body,” he declared, “will that kid come back to Image Comics.”

  Liefeld would soon be singled out by Marvel as well. “I got to California,” recalled Rhoades, “and at two in the morning, I get a call from Scott Sassa, who said, ‘Just make this a goodwill ambassador mission, I know you can do it, you’re our Great White Hope.’ What it really came down to was that Sassa and Jim Lee were both Korean-Americans, and they liked each other, and Scott didn’t want to screw Jim over. So I go out and make pretty to everybody, and Jim shows me his office that looks like the deck of the Starship Enterprise, and Rob invites us in and does his self-serving little dance.” As soon as Rhoades returned to the East Coast, he sent a letter to Liefeld informing him that his contract for Captain America and The Avengers was being terminated. (Jim Lee, who by now enjoyed a rivalry with Liefeld, would take over the titles until the contract ran out.)

  Liefeld quickly announced plans for a comic called Agent America, featuring a suspiciously familiar-looking patriotic character (complete with teenage sidekick and an archenemy named the Iron Skull), into which he would rework his leftover Captain America plots. After Marvel threatened legal action, Liefeld abandoned Agent America and bought the rights to the Fighting American—the star-spangled, shield-wielding rip-off hero that Joe Simon and Jack Kirby had created in the 1950s as a riposte to Marvel’s ownership of Captain America. Then, to amplify the similarities even more, Liefeld gave Fighting American a shield to throw. Marvel sued, and a judge ruled that Liefeld could continue to publish Fighting American only if he made specific changes. Both sides claimed victory. In a matter of months, Rob Liefeld had gone from competitor to prodigal son to pariah.

  In the minds of many, Marvel’s time in bankruptcy court would be reduced to a power struggle between Ron Perelman and Carl Icahn. But there were, in fact, two other major forces at work: there were the banks to whom Marvel owed money, who just wanted their hundreds of millions of dollars back, and there was Toy Biz, which wanted to protect its exclusive and nonexpiring license to make Marvel toys. Over the next several months, a head-spinning number of alliances would be formed and dissolved between the four sides, in varying permutations, as teams of lawyers screamed obscenities at one another.

  After the bankruptcy judge ruled in March that Icahn and the bondholders could foreclose on the stock collateral, Ron Perelman withdrew his recapitalization plan, on the condition that Icahn would not bring legal action against his team for any mismanagement of Marvel over the previous years. (Perelman did not, however, insist on immunity for Toy Biz’s Ike Perlmutter and Avi Arad. If Icahn needed to squeeze them out of the company, so be it.)

  By now, Ike Perlmutter was no longer on speaking terms with Perelman. “How you feel when somebody promise you and agree to pay you eighteen and a half a dollar a share, and a few months later you find you have zero?” he asked the court. “How you feel when you lose $200 million?” Perlmutter and Arad briefly aligned themselves with Icahn, until Icahn confirmed their worst fear—if he took control, he would try to nullify Toy Biz’s contract for the Marvel license. So in April, Toy Biz announced its own plans for acquiring Marvel, a leveraged buyout in which the banks would receive $420 million in cash and a 28 percent share in a merged Toy Biz/Marvel company, plus proceeds from the sales of Fleer and Skybox. Icahn was furious. “I will crush your company,” he told Perlmutter, “just like I did at TWA, at Texaco, and at U.S. Steel.” In response, Perlmutter faxed Icahn a clutch of threatening pages from the Old Testament.

  But Toy Biz second-guessed the terms of the merger after conducting due diligence and withdrew its proposal. Perlmutter instead cut a deal with Icahn, and then, just as suddenly, backed out of that, too. Toy Biz was flailing around, looking for delaying tactics.

  The court, however, was ready to move forward. On June 20, the bondholders were granted control of the Marvel board, with Carl Icahn installed as chairman. The company wasn’t entirely his yet, though. Marvel would remain in bankruptcy while the banks continued to wait for an acceptable proposal. At the behest of the banks, Ron Perelman would remain a fly in the ointment, doing what he could to prevent Icahn from winning ownership of Marvel. But his days with Marvel were effectively done. He’d done okay for himself, though, having lined his pockets over the years to the tune of $300 million.

  “One day [Scott] Sassa was there in the center of the bullpen assuring the publishing staff that Perelman would prevail over the barbarians at the gate,” recalled publisher Shirrel Rhoades. “The next day he’d disappeared, never to be seen in the Marvel offices again.” The following week, employees were surprised to see retired Marvel executive Joe “the Squid” Calamari saunter into the office. Calamari, who had volunteered his consultancy services to Icahn at the rate of $1,500 a day, was the new president. “Joe Calamari shows up and says, ‘I’m in charge,’ ” recalled another senior-level employee. “We didn’t even know if it was true! It wasn’t like Carl Icahn came in and called a meeting and introduced Joe Calamari as president. It seemed like Joe just showed up on the doorstep one day.”

  Even more than the executives who’d preceded
him, Calamari was eager to implement his own ideas for the company. Some of his strategies seemed to reflect a desire to return to past glories: Chris Claremont was hired as editorial director,* and Michael Golden, the fan-favorite artist whose early 1980s work had inspired the Image generation, was named art director. Other Calamari initiatives—like promoting Marvel’s comics at hot-air balloon festivals, or creating the world’s largest pizza for the Chicago Comic-Con—seemed downright quixotic. He tried, to no avail, to convince the editorial department that it should create two new universes to replace the classic Marvel one. They’d been down that road with Jim Shooter already.*

  “It was a bit of a disaster,” Shirrel Rhoades said of Calamari’s appointment. “Calamari is ADD. He cannot hold a coherent thought for 13 seconds. You go in and ask him A, and he’s off on B and G and Z, and you walk out saying, ‘What did we decide?’ I thought Calamari was the worst boss that I’ve ever had in 45 years in publishing. He meant well, but he was very ego-driven, and he wanted to screw around with movies.”

  Calamari had been the East Coast point person for Marvel Productions and Marvel Films during the frustrations of the early 1990s, and now he rolled up his sleeves to get things done. He wanted to make deals, wanted to hobnob with producers and directors, even if it meant stepping on the toes of Avi Arad and Marvel Studios. Unfortunately, Carl Icahn was no more excited about film investments than Perelman had been—he just wanted to flip the company and make a quick buck. Calamari’s conference calls with Icahn’s people were epic, hypnotic fugues: “Fuck you.” “No, fuck you.” “No, no, no—fuck you!”

  Out in Hollywood, Marvel Studios plugged away anyhow. Blade, based on Marv Wolfman and Gene Colan’s Tomb of Dracula character, was actually in production, with a respectable $45 million budget, and Nicolas Cage was eager to star in Iron Man. But otherwise it was the same holding pattern that Stan Lee knew all too well: Silver Surfer, Fantastic Four, X-Men, Daredevil, and Doctor Strange in various stages of development. And the fact that Marvel Studios’ Avi Arad was also part of Toy Biz—which was still scheming to gain control of Marvel—meant his days serving in Icahn’s administration were numbered. In October, Toy Biz met with the banks, and Arad gave a stirring speech about the value of Marvel’s characters in an attempt to dissuade them from agreeing to a deal Icahn had on the table. “We live in one of the most creative countries in the world. But look around you and see how few characters have been introduced and survived. You have Star Wars, maybe Star Trek, and you’ll be hard-pressed to name any other characters that survived that long.” His years of pitching movie studios were paying off. “I feel certain that Spider-Man alone is worth a billion dollars. But now, at this crazy hour, at this juncture, you’re going to take 380 million—whatever it is from Carl Icahn—for the whole thing? One thing is worth a billion! We have the X-Men. We have the Fantastic Four. They can all be movies.”