Comic Wars: Marvel's Battle For Survival

COMIC WARS

Marvel’s Battle for Survival

by Dan Raviv

LEVANT BOOKS

Sea Cliff, New York

COMIC WARS:

Marvel’s Battle for Survival

Copyright © 2002, 2004, 2012 by Dan Raviv

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher.

LEVANT Books

Sea Cliff, NY 11579

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Previous edition published by Broadway Books, a division of Random House, Inc. as

COMIC WARS: How Two Tycoons Battled Over the Marvel Comics Empire—And Both Lost.

PRINTED IN THE UNITED STATES OF AMERICA

Library of Congress Cataloging-in-Publication Data

Raviv, Dan, 1954-

Comic wars : Marvel’s battle for survival /

Dan Raviv.—e-book edition

Includes bibliographical references.

1. Marvel Comics Group—History. 2. Comic books, strips, etc.—United States—History and criticism.

3. Perelman, Ronald. 4. Icahn, Carl C., 1936- I. Tide.

Cover design by Amanda Conner

E-book layout and technical editor: Paul Skolnick

Comic Book Frames and Marvel Comic Book Characters: ® & © 2001 Marvel Characters, Inc.

Used with permission.

ISBN: 978-0-9854378-5-5

ALSO BY DAN RAVIV

(with Yossi Melman)

Spies Against Armageddon:

Inside Israel’s Secret Wars

Friends in Deed:

Inside the U.S.-Israel Alliance

Every Spy a Prince:

The Complete History of Israel’s Intelligence Community

Behind the Uprising:

Israelis, Jordanians, and Palestinians

The Imperfect Spies

To Dori,

Jonathan,

and Emma—

my sweet life

Contents

The Warring Parties

Prologue: Yipe! Hey! What’s Going on Here???

1. Meet Dr. Doom

2. The World Would Never Again Be the Same!!

3. You’re Too Little to Be Playing with Such Dangerous Toys!

4. If He’s Trying to Pull the Wool over Our Eyes...

5. Now Is the Moment to Strike!

6. A Fine Kettle of Fish This Is!

7. The Vulture Will Never Threaten Anyone Again!

8. He Paid the Full Price—and He Paid It—Like a Man!

9. Is He Man or Monster or… Is He Both?

10. It’s All Part of the Job

11. And Now—Let It Begin!

12. Duel to the Death with the Vulture!

13. Onward, My Comrades—The Time Has Come to Face Our Greatest Foes!

14. There’s No Place on Earth Where You Can Hide from Me!

15. To the Death!

16. You’ll Never See What’s Coming Next!

17. It’s Like Hitting a Brick Wall!!

18. No More Mister Nice Guy

19. This Is a Job Only We Can Handle!

20. Captain Marvel, Back from the Dead!

21. Heh! Heh! Look At the Spider Fly!

22. This Blockbuster to End All Blockbusters

Epilogue

Notes and Acknowledgments

The Warring Parties

The Townhouse

Ronald O. Perelman: one of America’s wealthiest citizens and chairman of MacAndrews & Forbes (M&F), his personally owned holding company that controlled Revlon and many other enterprises, including Marvel Entertainment Group from 1989 to mid-1997.

Howard Gittis: Perelman’s chief deputy in M&F’s New York City headquarters, known as the Townhouse.

Donald Drapkin: vice chairman of M&F, the third member of the Townhouse troika.

William Bevins: chief executive officer of Marvel, also running Perelman s other entertainment holdings, New World Entertainment and the Andrews Group Incorporated.

Scott Sassa: hired by Perelman to replace Bevins in October 1996, about two months before Marvel’s bankruptcy.

Harvey Miller: one of New York’s top bankruptcy attorneys; he filed Marvel’s Chapter 11 documents in December 1996.

Laura Davis Jones: a litigator in Wilmington, Delaware; she represented Marvel in bankruptcy court even after the company was taken over by Carl Icahn.

Icahn & Associates

Carl C. Icahn: one of America’s wealthiest citizens, a self-made billionaire with long-term investments in real estate and railway cars, supplemented by contentious raids on corporations of many kinds; he bought Marvel’s bonds when the company’s crisis in 1996 made them very cheap, and became Marvel’s chairman in June 1997.

Vincent Intrieri: vice chairman of Icahn’s bondholders committee, an accountant and investment advisor specializing in profiting on the stocks and bonds of distressed companies.

Edward Weisfelner, David M. Friedman, and Marc Weitzen: New York-based lawyers for Icahn and his bondholders committee.

Joseph Calamari: a former executive at Marvel, appointed CEO by Icahn after advising him during the takeover battle.

Toy Biz

Isaac (Ike) Perlmutter: a tycoon proud of near anonymity, the controlling shareholder of Toy Biz; he made a shares-for-licensing-rights deal with Perelman that turned the toy company into a subsidiary of Marvel.

Avi Arad: master toy designer, Ike’s partner at Toy Biz, who changed himself and Marvel into an influential force in movies.

Joseph Ahearn: longtime chief executive for Ike’s various enterprises and Toy Biz’s CEO during the fight over Marvel.

Larry Mittman: an attorney at the New York law firm known as Battle Fowler; he represented Toy Biz and served on its corporate board.

Terry Savage: an investment banker, specializing in buying and selling parts of troubled companies; he helped Toy Biz bid for Marvel.

Eric Ellenbogen: former chief executive of Broadway Video, hired as the new Marvel’s CEO in December 1998.

The Banks

Chaim Fortgang: New York’s most pugnacious attorney for banks seeking to recover their money when loans go sour and borrowers go bankrupt.

Douglas Liebhafsky: one of Fortgang’s partners in Wachtell, Lipton, Rosen & Katz, the law firm known as Wachtell, Lipton.

Susan Atkins: a vice president in Chase Manhattan Bank’s corporate work-out group.

Bill Repko: a senior executive in Chase’s work-out department.

The Others

Helen Balick: judge in the United States Bankruptcy Court in Wilmington, Delaware.

Roderick McKelvie: federal judge in the United States District Court in Wilmington; he reviewed many of Balick s decisions when one side or another filed an appeal and took over the entire Marvel case in November 1997.

Jeffrey Schultz: a professor in Tennessee and a corporate bond investor, he sent faxes to all parties in the Marvel conflict suggesting various complex solutions.

John J. Gibbons: a retired federal judge, he became the court-appointed trustee administering Marvel in December 1997.

James Spiotto: attorney for LaSalle National Bank, trustees for the Marvel high-yield bonds; he sued Ronald Perelman for pocketing the bonds’ proceeds.

Stan Lee: Marvel’s editor in chief for many years; after leading the team that created Spider-Man and other comic book heroes, he settled into watching this war from the comfort of Los Angeles.

Sub-Mariner #35, August 1954

Prologue

Yipe! Hey! What’s Going on Here???

Autumn in Manhattan had never been prettier, the business outlook for Marvel never uglier. The Israeli entrepreneur was sure he had it figured out, and he was just as sure that the thing to do was to tell the Wizard, You’re going to go bankrupt!

Marvel Entertainment Group, publisher of the world’s best-known, best-loved, and best-selling comic books—with a market value of over $3 billion on the New York Stock Exchange—was heading toward oblivion. But how would New York’s richest man take that news?

Ike Perlmutter, the Israeli, saw what lay ahead—just as clear as the bright October light outside his window. He had his secretary summon his driver. Then he took the elevator down to the lobby, went through the revolving door, and got into his limo at the curb outside 333 East Thirty-eighth Street.

The drive to the Upper East Side gave him only a few minutes to conjure up an approach to the Wizard. Two years before, their two companies had made an alliance. Now Ike was beginning to realize that he had penned a pact with the Devil.

In 1993, the partnership seemed like the best thing he had ever done. His company, Toy Biz, made all sorts of dolls and PVC action figures, often based on TV cartoon characters or hit movies. Increasingly he found that his best-sellers were toys based on the superheroes of Marvel’s comics. One of the biggest drains on his business at Toy Biz, however, had been the royalty fee that he had to pay to Marvel for the right to use the characters.

So in tough talks with the financial wizard—Ronald O. Perelman, chairman of Marvel Entertainment—Ike had hammered out a deal that eliminated the royalties. Instead of constantly bleeding cash, he had given the Wizard a big piece of Toy Biz. He figured that Perelman, the brilliant tycoon, would help him lift Toy Biz to new heights. Instead, they were now mired together in the muddy muck of sinking profits.

If Ike’s analysis—in truth it was more his gut feeling—was correct, there might soon be no Marvel. No Spider-Man, no X-Men, no Wolverine, no Fantastic Four, no Incredible Hulk. Ike did not involve himself with the creative side of the business, and he had never read the comic books. He did, however, have a big personal stake in keeping the fictional stars alive. How else could Toy Biz, with its product line led by Marvel characters, survive?

But Ron Perelman, true to his Wizard status, remained distant. They might have been allies, and the wealthier man did give Ike some lovely gifts, but they rarely got together to talk business. Gone was the notion of learning from a master. The Wizard had bigger projects than Marvel, and one failed rosebud in a garden of fragrant flowers seemed not to bother him.

Ike, while also cultivating his plot of investments—though not as large as Perelman’s—despised having even one ugly weed. As the controlling shareholder of Toy Biz, Ike had staked millions of dollars and most of his reputation on his connection with Marvel. But instead of spurring Toy Biz’s growth, this hybridization was stunting it. Worried by signs that his company was in the middle of a miserable 1995, the Israeli tried to get to the root of the problem by digging into Marvel’s books—not their comics, but their financial records.

Marvel had made plenty of acquisitions, but Ron Perelman had so little to show for it: Sales were down on comic books and on Marvel’s new major line, trading cards. Kids were not exactly flipping over Spider-Man and Incredible Hulk cards, and Marvel got into baseball cards just when the Major League players’ strike was strangling the sport.

Worst of all was Marvel’s biggest area of growth: debt. Using Ronald O. Perelman’s reputation as its best collateral, the company had borrowed a total of more than $700 million from banks and nearly $1 billion from bondholders to finance various stages of expansion.

Ike Perlmutter could hardly believe the total—$1.6 billion in the hole! He had turned to some of the investment industry’s top analysts to help him scour the fine print and found that most of Marvel’s debt was structured in highly unusual ways, designed not to benefit the comic book publisher but to feed cash into Perelman’s own privately owned holding company. Ike concluded that if Perelman was a brilliant, self-made emperor, his cloak was flimsy Wall Street paper.

Ike had built his own fortune based on acquiring companies and surplus goods as cheaply as possible, and he was stunned by the way the Wizard squandered money. Why did Marvel pay $286 million for Fleer, the sports trading card company? And why, even after the Major League baseball walkout, did Perelman spend another $150 million acquiring SkyBox? That company had been created by the National Basketball Association to produce NBA cards, and it was now trying to feature cartoon characters in card packs that were total air balls with the kids. Ike never would have offered so much. His approach was always: Take my rock-bottom offer, or forget about it!

Yet the Wizard’s team kept adding to a sky-high mountain of debt without a hint of hesitation or apology. Howard Gittis, Perelman’s consigliere, once told Perlmutter: Ike, when you decide you want to make an acquisition, you pay whatever you have to. There’s no point to going cheap. You pay the price and move on.

When Perelman and Gittis worked with Ike to take Toy Biz public, the Israeli closely examined all the bills related to issuing shares, just as he would put on his glasses to scan every line of a restaurant check for mistakes. When he saw how much Wall Street’s favorite printing company charged for the standard prospectus, he asked why. He had them quote for cheaper paper. He quibbled about the extra cost for workers’ overtime. He saved a few hundred dollars, but in time he heard from businessmen that Perelman’s people—who ordered prospectuses to sell shares, bonds, and entire companies practically every month—were laughing behind his back, calling him a cheapskate.

The Wizard was always pleasant on the surface, greeting Ike with a warm embrace whenever they got together. But it was hard to have an in-depth conversation with Perelman. Like Oz’s wizard, he stayed well-hidden behind a curtain. Whether it was at Marvel, Consolidated Cigar, his New World chain of TV stations, his First Nationwide Bank, Coleman camping equipment, or Revlon, the cosmetics maker that he had acquired in a huge hostile takeover fight in 1985, Perelman installed a consummately loyal chief executive officer at each company.

Among the CEOs, Perelman had an inner circle of thorough and intelligent advisors who were also his friends, closest among them Gittis and Donald Drapkin. Fiftyish and bald like their boss, they were the Haldeman and Ehrlichman to Perelman’s Richard Nixon, as they screened all calls and conversations and filtered very few through to the top.

The whole structure was called MacAndrews & Forbes Holdings Inc., and Perelman was the sole owner. Gittis and Drapkin held no shares at all but enjoyed salaries of around $10 million a year. For this their friend and benefactor, Ronald, expected them to have total devotion, to attend a freewheeling and chatty breakfast every weekday morning, and to live in Manhattan within walking distance of 35 East Sixty-second Street—the unmarked corporate headquarters known in the business world simply as the Townhouse.

Perelman’s walk was easiest of all. He lived just behind the Townhouse, in another townhouse on East Sixty-third Street, with his third wife, Patricia Duff—an intense, intelligent, and beautiful Democratic Party activist—and their baby daughter, Caleigh. Both townhouses were stunning inside. The residence had five bedrooms, a playroom, two libraries, two dining rooms, and an exercise gym and a movie screening room in the basement. Keeping everything clean and smooth-running were a butler, a chef, a nanny, and two full-time maids. The office building had its own service staff and was overstocked with antique furniture and paintings by both Old Masters and the giants of twentieth-century art.

Every morning, the owner of all this—a man whose personal wealth totaled $6 billion—would simply stroll across a brick patio between the two properties, pass two statues of Greek goddesses, perhaps nod to acknowledge the ex-cops on duty as bodyguards, pause to honor Jewish tradition by kissing his fingers and lifting them to touch the mezuza on the entrance door frame, and take the elevator or walk up the stairs to his spacious office on the third floor.

On the autumn day that Ike came to call, he stepped out of his limo and took a good look at 35 East Sixty-second. The seven-story, 25,000- square-foot house made of clean white stone and peach-colored bricks had columns and windows very different from those of the neighboring properties, and a grand loggia that echoed the top of a palazzo in Venice. There was no plaque or sign that said MacAndrews & Forbes. There was no clue as to what was inside: the multibillion-dollar holding company and the lavish decor.

Five feet ten and lanky, with a healthy head of brown hair worn boyishly short, Ike had an Israeli’s eye for security arrangements. He took note of the two cameras just above the ground-floor windows that flanked the entrance. A third camera peered down from way up on the loggia. Ike felt certain there were others hidden inside. He swung the front door open himself and noticed one of the many security men employed by Perelman, all said to be FBI veterans or retired New York City police officers.

This was an odd world for Ike, overblown and exaggerated, more a reflection of differences in personality than disparities in bank balances. Ronald Perelman chose to be secure in a high-testosterone bubble of his own making. Ike liked to live life in a more relaxed way, and while he had his eyes wide open and missed no details, he coasted with ease through situations that would leave a less secure person shaken.

Ike was on his mission because he liked to tell the true, his Israeli syntax for the truth. Having concluded that Marvel was mismanaging itself into a severe cash crisis, Ike had decided just to spit it out: to tell Ronald the true.

Everyone always seemed afraid of the Wizard. He smiled a lot—at charity events, movie premieres, and other soirees that he seemed to relish as the boss of Revlon, often escorted by the cosmetics company’s supermodels—but the handmade suits, the bodyguards, the assistants, and the public relations flacks around him created a swirl of tension. Five feet eight and invariably clutching a cigar, he would yell at people, loudly complaining about the smallest oversights.

Ronald Perelman was in a world that was generally profane—both in its language and in its main interest, money—yet he was extraordinarily gracious and generous to various charities, to several colleges, and to the ultra-Orthodox Jewish sect known as the Lubavitchers. He donated millions of dollars to Lubavitch projects, notably a huge school for Orthodox girls in Brooklyn. At fund-raising banquets, he enthusiastically hugged the many rabbis in gray beards and long black coats.

Ike was cleared by the receptionist, whose desk commanded the high-ceilinged lobby of the Townhouse. The former policeman who sat near her barely looked up as Ike stepped into the lobby’s elevator and pushed 3. Upstairs, there were three more secretaries and a dispatcher for Perelman’s private jets and helicopter.

It was perfectly clear who was granting the audience to whom. Perelman’s holding company owned 80 percent of Marvel, and Marvel owned 40 percent of Toy Biz—Perlmutter’s baby. Ike, personally worth a mere $500 million or so, was unaccustomed to being a beggar at anyone’s banquet. He preferred to think of himself as a partner.

The Wizard himself greeted Ike with the standard hug—back-patting, but superficial—as Ike stepped into the mogul’s private office, the inner sanctum rarely seen by visitors.

Ike felt as if he were in someone else’s private club with only a one- day guest pass. The owner, Gittis, and Drapkin were helping themselves to their self-service breakfast from a polished wood tabletop—hotel buffet-style. During this morning ritual, they would skim through all the day’s major newspapers and enjoy chatty, locker-room-like banter about sex, sports, and money. They would even eat off one another’s plates. They all had their shoes off. A shoe-shine man was buffing their footwear, just outside in the corridor.

And then came the doctor, the house physician who took Perelman’s blood pressure at least twice a day. And Gittis’s, and Drapkin’s. They were not wearing their suit coats anyway, and now they took turns rolling up their shirtsleeves for the doctor. Ike, looking after himself just fine at fifty-three, got ready to say, No, thanks, but he was not invited to partake of either luxury: the shoe shine or the checkup.

So what’s happening, Ike? asked Howard Gittis. Short and stocky, he had been Perelman’s closest friend and lawyer for twenty years.

Perlmutter dived right in, with his thick accent and rolling R’s. He said, Ronald, Howard, Donald. Listen. I see a very serious problem in Marvel. Nobody’s going to tell you, but I’m going to tell you. I see a bankruptcy here.

The Wizard shot back with, How can you say that?

But Ike held his ground, feeling you give a partner the true, however bitter. He calmly declared: Listen to me. I make most of my money from people getting into trouble. And I can see it. You’re heading towards bankruptcy.

Perelman shook his head, his diastolic now rocketing skyward. But containing his anger, the Wizard said quietly, So tell me, Ike. What do you think is going wrong?

"Ronald, you have to start doing things—doing things to take advantage of the Marvel characters! You have to make movies and do all kinds of things so people are going to talk about Marvel!"

The Wizard did not respond. Instead, Gittis rose from his leather chair to explain that all the financial advisors felt that the company had a higher value if it did not pour any risk capital into movies—at least not now, when Marvel had to be seen as keeping up with the interest payments to the banks.

Wait a minute! Ike blurted out. "Let me tell you something. Right now, you’re dying. And if you don’t do anything, I tell you again, Marvel is a bankruptcy. Not to mention that my company—our company, Toy Biz, because you own such a big share—our company is suffering. The action figurines stop selling. We’re not getting any reorders. We just got word from Wal-Mart. They stop selling Marvel figurines, the action figures. Perelman watched quietly as Gittis replied derisively, What should we care about action figures?" To the Townhouse trio, this was a minor part of their proprietary interest in Spider-Man, Captain America, and the X-Men.

When the action figures don’t sell, the accessories don’t sell, Ike lectured. When the accessories don’t sell, the soft goods—like T-shirts—don’t sell. Then it’s all over. You’re just heading down.

The Wizard finally cleared his throat to ask: What does all that mean for Marvel?

Things like soft goods and figurines don’t sell because no one’s talking about the characters, said Ike. "What you have to do is make movies. People got to talk about you."

Perelman looked at Gittis.

Listen! Ike declared. You should think about movies, and if you want to know about movies and Marvel, you should listen to my partner. Get him here! Avi has a lot of things in his head.

The Wizard nodded in agreement, and Ike bounded out of the room. He raced up two flights of stairs to the fifth floor, where he knew he could find a vacant office and a telephone. He reached his partner and friend, Avi Arad, in Avi’s chauffeur-driven Mercedes.

Shma, Avi! Ike said (meaning Listen!), then continued in rapid-fire Hebrew. Even though both had lived in the United States for almost thirty years and both were married to American women, the two Israelis found their native language most comfortable and a mark of intimacy and trust. You’re about to get a phone call from Ronald. Yes, Ronald! I’ve just been with Ronald and Howard and Donald Drapkin. At that moment, Avi heard a call waiting tone. I’d better go, he said.

When he hit Send to answer the incoming call, it was indeed Ronald Perelman, summoning him to the Townhouse immediately. Avi knew what he wanted to say there. He and Ike had chatted for hours about movies as the best way to promote superheroes.

Avi felt genuine passion for Marvel’s illustrated stars, unlike Ike, who could name maybe four or five. In many ways, they were an Odd Couple: Ike as Felix, and Avi as Oscar. Perlmutter was very conservative, in politics and behavior, and nearly always wore a coat and tie—although not the flashiest or most expensive. Arad, forty-eight, was bearded and far more flamboyant, usually garbed in black leather. After his Toy Biz driver took him home to tony Westport, Connecticut, he spent many evenings riding his motorcycles.

While they both strove to relax, Arad went even further. Perlmutter cared deeply about Toy Biz’s problems because he got a kick out of confronting crises. But Arad professed not to care all that much. He enjoyed saying: I don’t give a shit. I never expect the good times to last, and if they don’t, then I’ll just go home and start again. This was the insouciance that came from having twenty million dollars of toy-design royalties in the bank.

By the time Avi arrived at the Townhouse, his friend Ike was gone, leaving him to face the management trio alone.

Once he had been ushered into the inner sanctum and encased in a soft chair, he launched into his favorite theme.

You know, Ronald… Avi spoke with a slightly British inflection. "As I see it, it’s quite simple: We have to make movies. I feel like we work on making movies, but we always find a way not to make them. Whether it’s contractual problems or us demanding a very big share of the money, we have a lot of work on deals, but then the contracts are very difficult. We have Blade at New Line, and that has Wesley Snipes in it and that ought to be good. And we have lots of talks with Fox and Universal. But I’m swimming like a salmon, against the stream."

Gittis turned to their boss to counsel caution: Ronald, we have to be careful making movies. We have to keep the multiple up!

Avi did not expect to redirect the river. He had already heard from his superior at Marvel, the CEO William Bevins, that Perelman did not want to rush anything when it came to movies. Now this talk of the multiple clearly signaled that, for the Townhouse, the price-earnings ratio mattered more than seeing Spider-Man or the Incredible Hulk on the big screen.

Avi spread his arms as though to embrace the tycoon and his closest aides, and continued: Ronald, if you don’t mind me saying so, I think TV and movies are so good for selling the Marvel characters. Good for Marvel. We had an aggressive TV strategy, and we were successful with it. I think we can succeed with the movies. You have to realize what a gem—what a treasure chest—you own, when you own all the characters. They are part of a truly original American art form—like jazz. There are so many Americans who know them and care about them! Something of a wizard himself, Arad would try anything to fire the imaginations of these men who saw only numbers. Synergy? Cultural heritage?

Then Avi played his trump card—ego. "And you know, Ronald, you’re a big guy. You hang out with every celebrity out there. They all want to be seen with you. Maybe you could be more involved in getting the Hollywood people to do our movies?"

Ronald Perelman nodded, leaving Avi to think that he might have scored some points for Spider-Man and his friends. But the Wizard of Wall Street had long before concluded that selling junk bonds to investors was far more profitable than selling movie tickets to teenagers.

Fantastic Four #5, July 1962

Chapter 1

Meet Dr. Doom

Ronald O. Perelman—America’s richest short, bald, forty-six-year-old chain-cigar-chomper—seemed to have a delicious deal when he bought Marvel Entertainment Group in January 1989. This was not a hostile takeover. It was simply a matter of negotiating a fair price for a property that seemed to have untapped potential.

The owner dumping Marvel was New World Entertainment, a Hollywood production company that garnered very limited payoffs from made-for-television movies featuring the Incredible Hulk and other Marvel comics superheroes. New World had gone flat and wanted to pump itself up with new genres of TV and movies. So Marvel was on the auction block, and when Perelman saw that half a dozen companies were making bids he hardly needed to check his credit line. He simply outbid the others at $82.5 million.

The delicious part was what Wall Street calls leverage: He had to put up only a small percentage of the money. All the rest was somebody else’s.

MacAndrews & Forbes, the shell company owned personally and wholly by Perelman, cut a check for just $10 million. More than $70 million was borrowed from a syndicate of banks, led—as was becoming standard for Perelman—by Chase Manhattan. Chase would handle all the paperwork and formally make the loan offer while recruiting other banks to take on portions of the risk.

But what could be so risky here? Chase and the others were happy to finance Perelman’s Marvel acquisition. This was small change compared with the billions of dollars of business that this tycoon represented in his recent past and his likely future. So far he had displayed a terrific eye for spotting undervalued companies, taking them over, giving them new management, and often breaking them up so that the pieces could be sold for an easy profit. That is what corporate raiders do for a living.

Perelman told his bankers—the secured lenders, in the parlance of mergers and acquisitions—that owning Marvel would be fun. Chase Manhattan did not lend money for laughs, but his idea of a good time seemed sound enough. Some in the business community had seen the needlepoint message in the ground-floor conference room of the Townhouse. Beneath the huge, framed paintings by Roy Lichtenstein and Andy Warhol was one pillow with stitching that read: Love Me, Love My Cigar. Another had this motto: Happiness Is a Positive Cash Flow. What banker could disagree?

Perelman said that he would take Marvel far beyond the sleepy and small business of publishing comic books. It is a mini-Disney in terms of intellectual property, he said. Disney’s got much more highly recognized characters and softer characters, whereas our characters are termed action heroes. But at Marvel we are now in the business of the creation and marketing of characters.

Perelman never claimed to have a clear blueprint for this kind of expansion. And the bankers had no earthly idea how much more they would be lending him in the six years to follow.

Chase Manhattan and the other banks treated Ron Perelman as the wizard he appeared to be, and they enjoyed a constant stream of fee-generating transactions with him. When they loaned money to Perelman’s companies, the banks were secured—first in line to be repaid should the debtor go bankrupt.

Bankruptcy was not, however, a word even remotely in the lexicon when discussing Perelman’s early years at Marvel. True, the comic book characters had not been fully exploited by New World. But the books were selling to a core of loyal fans, and the beginnings of a collectibles craze could be detected as the 1990s got under way.

Perelman also felt he had the perfect man to lead Marvel into a wider world of entertainment: the tall, blue-eyed, and articulate Bill Bevins, former chief financial officer of Ted Turner’s broadcasting empire in Atlanta. One newspaper assigned Bevins the perfect characteristics for his job, calling him an affable numbers cruncher accustomed to coddling mercurial tycoons.

In just a few years, Marvel’s obligations mushroomed into a total debt of $700 million. No one, certainly not the banks, had planned it that way; but little by little and lot by lot, Marvel managed to get yes after yes in a system that often kept the right hand of a bank syndicate unaware of what the left hand did. And if a banker should ever lean toward saying no, the Townhouse could step up the pressure by hinting that Perelman would take his business elsewhere.

He was never afraid of debt. Through large ups and small downs, various forms of borrowed money had fueled his rise to riches. As a boy, he learned about business—and takeovers—from his father, Raymond, who was quite an aggressive conqueror of companies and corporate boards on a Philadelphia, if not a New York, scale. The Perelmans had the fanciest house in an affluent, largely Jewish suburb—Elkins Park. Perelman the Younger studied business at the University of Pennsylvania’s Wharton School and showed signs of impatiently wanting to outdo his dad. With some paternal advice, he bought a brewery for $800,000 and sold it three years later for a million-dollar profit.

Ronald launched his own family in 1965 by marrying Faith Golding, a wealthy New Yorker whom he had met on a cruise to Israel. The bottom line: an infusion of capital from the well-to-do Golding clan; four children in eighteen years of marriage; and, in the end, a divorce that was court-contested and acrimonious. When Mrs. Perelman discovered that there was a mistress, she hired high-powered lawyers who loudly laid claim to much of Mr. Perelman’s stock portfolio.

The key development in that marriage was the family’s move to New York when the children were young. It was 1978, Perelman was thirty-five years old, and he had definite ideas of how best to make his mark. His father was angry over his departure, and Ronald and Raymond hardly spoke to each other for several years. Somewhat coldly, the younger Perelman explained: I wanted to create an entity on my own, without the constraints of the familial relationship.

The younger Perelman quickly formed a pack