Studio Rights to Spider-Man Are Untangled

In an ending worthy of a comic-book cliffhanger, Spider-Man has been rescued from the clutches of . . . lawyers.

The nearly eight-year legal battle over the movie rights to the last major untapped superhero ended Monday on the eve of trial, with MGM relinquishing its claim to the rights in favor of Columbia Pictures, which said it would move swiftly to place the property into production.

“The idea is to do it now, as fast as we can,” said Amy Pascal, Columbia’s president. “It’s a big tent-pole movie.”

Pascal was referring to widely held expectations for the prospects of a big-budget picture featuring the Marvel Comics superhero, who is probably the most popular pulp-fiction figure still unexploited by Hollywood.

Columbia’s parent, Sony Pictures Entertainment, also won the rights to produce sequels to the initial picture and a live-action television series. Sony and Marvel Enterprises also said they would establish a 50-50 joint venture to license Spider-Man-related merchandise, including toys, games and apparel, that could generate billions of dollars in revenues.

The deal also may give Columbia something that many observers believe it lacks--the foundation of a long-term movie franchise on the order of Warner Bros.’ Batman or MGM’s James Bond.

“We believe that Spider-Man is the most remarkable potential franchise that has been unmined to date,” said Sony Pictures Entertainment Chairman and Chief Executive Officer John Calley in an interview.

Marvel, for its part, gets the chance to give its most colorful and popular character the worldwide exposure that can come only from a big-budget live-action feature. To Marvel executives, that means the close of a period of stagnation and bankruptcy that began after corporate raider Ronald Perelman, who bought the company in 1989, tried unsuccessfully to build it into an entertainment conglomerate.

“This symbolizes that Marvel’s on the move again,” said Eric Ellenbogen, president and chief executive officer of Marvel Enterprises.

A Web of Legal Claims

Spider-Man was first introduced by Marvel in 1962 in the character of Peter Parker, a high school senior bitten by a radioactive spider. This bite gave him the proportional strength and agility of a spider along with a keen “spider sense.”

Many in Hollywood expect a Spider-Man live-action film to attract the biggest directing and acting names, warrant a $200-million budget and bid to be the event movie to beat in the year of its release. Among those who have expressed interest in making such a picture is James Cameron, the director and screenwriter of the blockbusters “Titanic” and “Terminator 2.”

Until Monday, those prospects were blighted by litigation. Marvel sold the rights three times in the 1980s to independent production companies that later went bankrupt. Then Marvel itself filed for bankruptcy protection. One of those independent studios in turn licensed the television and home-video rights to the movie production to Viacom Inc. and Sony, respectively.

Marvel, Sony and Viacom ended up in litigation with MGM, which contended it had purchased or inherited the exclusive movie rights from the defunct independent studios. As the trial date neared, however, MGM suffered two major setbacks when state Supreme Court Judge Aurelio Munoz rejected key claims in summary judgment.

That left the financially strapped studio in the position of battling a Marvel counterclaim for what could be tens of millions of dollars in attorneys’ fees and indemnity payments in a trial scheduled to start before Judge Munoz today.

Instead, MGM chose to settle with Marvel, accepting what one source said was a monetary settlement to end its quest to make the film. Marvel in turn dropped its claim for damages. The final settlement was signed, a source said, at 2 a.m. Sunday.

Viacom Still Pursuing Rights

Meanwhile, Sony reached its own agreement with Marvel. For a cash advance between $10 million and $15 million against gross revenues, sources say, Marvel awarded Sony the feature, sequel and TV-series rights and entered into a joint venture to license Spider-Man movie-related paraphernalia. Marvel will retain full rights to non-movie-related Spider-Man licensing, but the license for the manufacture of all toy tie-ins to the movie will go to its Toy Biz subsidiary, giving it the opportunity for further profits.

The settlements do not involve Viacom, which as of late Monday was still pursuing its claim to television distribution rights to any Spider-Man film.

Also unresolved are two other unrelated lawsuits pitting MGM against Sony: one in which MGM contests Sony’s claim to the right to produce a remake of “Thunderball,” one of the James Bond properties that have been such cash cows for MGM; and another in which MGM challenges Sony’s accounting of its home-video sales of such MGM assets as “The Silence of the Lambs.”

The Marvel-Sony contract requires the studio to begin production of a Spider-Man feature quickly; the actual deadline could not be obtained. It also places Columbia on a short leash in scheduling sequels, requiring in some cases that financing for a sequel be arranged within months of the release of the previous feature.

Second Chance for Columbia?

Those terms were dictated by Marvel, whose sloppy past contractual arrangements were at least partly responsible for the protracted litigation. The ambiguous wording of one deal, for example, allowed MGM to claim it owned a perpetual license to produce a Spider-Man film whenever it pleased.

The rebirth of Spider-Man is an important development for Columbia. Many Hollywood observers believe the studio’s efforts to turn last year’s “Godzilla” into a major franchise were disappointing.

Calley disputed that, arguing that the film’s $375-million worldwide gross and the success of a Saturday-morning cartoon spinoff show the franchise has plenty of life. He argued that Columbia had suffered instead from an inability to exploit potential franchises because of a lack of experience, including a system to manage merchandising spinoffs. Those shortcomings have been rectified, he said.

One intriguing question raised by Monday’s announcement is whether Columbia will make use of James Cameron’s screen treatment for a Spider-Man movie. Cameron’s treatment, which he wrote for the defunct studio Carolco for $3 million and which ended up in MGM’s possession, has attained near-legendary stature in Hollywood, despite having been read by very few people. Under the Sony-MGM deal, the treatment now belongs to Columbia.

Calley and Pascal both said they had not yet seen the treatment or been in touch with Cameron, who in any event is said to be under contract to Fox Studios for his next picture. “We’re not even at the point of investigating” whether Cameron or any other A-list directors are available, Calley said.