“Iron Man 2” packs a BIG punch for Disney

“Iron Man 2,” the first big Marvel superhero film to open since Walt Disney Co’s $4 billion purchase of the studio, should pack a $200 million to $300 million profit punch for Disney, analysts said.

While Viacom Inc’s Paramount Pictures distributes “Iron Man 2,” giving it a fee of 8 to 10 percent of box office revenue under a deal made before last year’s acquisition, Disney unit Marvel Studios gets a share of the profits and benefits from some merchandising and product tie-ins.

Financial analysts, many of whom believe Disney paid a full price for Marvel, are tracking the movie’s success closely to see how the acquisition of Marvel comic characters might benefit the company in the long term and unlock value for its other businesses, such as its theme parks.

“The biggest benefits will come when existing agreements for consumer licensing and distribution expire, but I think Disney will make close to $300 million on this over the life of the film,” said David Bank, analyst with RBC Capital.

Tony Wible, analyst with Janney Capital Markets sees Disney earning about $200 million in profits from the box office and merchandising, net of licensing fees, and from other sources like movie plug-in product placements by companies like Oracle and Burger King.

“The logic behind this acquisition is to build the brand upon a global scale. We expect this film to be highly profitable given that Marvel generally runs a very lean budget,” he said.

Box office watchers expect “Iron Man 2,” which opens in the United States and Canada on Friday, to rake-in over $600 million around the world by the end of its run, which could prove conservative, given last summer’s big hit, “Transformers: Revenge of the Fallen” earned $836 million worldwide.

The first “Iron Man,” which stars Robert Downey, Jr. as a weapons maker who manufactures a high-powered and lethal suit of armor, made $585 million worldwide in 2008.

Last weekend, “Iron Man 2” got off to a flying start with an international debut of $100 million. Paul Dergarabedian of tracking firm Hollywood.com Box Office expects it to make more than $120 million on its U.S. and Canadian debut weekend.

Some analysts forecast Disney making as much as a $40 million in profit by as early as the third quarter, but given the company’s size and annual revenues of over $36 billion, they see only a limited impact on overall corporate earnings.

Even “if the movie bombs, it could have a modest impact and we’d ask if there was a write-off,” said Bank.

While various analysts believe Disney, which reports second quarter earnings on Tuesday, paid a full price for Marvel, most expect the deal to pay off longer term after the Paramount and other agreements Marvel inked for merchandising and theme parks expire. Marvel, for one, has a toy licensing deal with Hasbro Inc.

“Disney paid a full price on Marvel. But if they can create one more character half the size of an ‘Iron Man’ the deal makes sense,” said Alan Gould, analyst with Soleil Research.

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