Spider-Man Backers Spin Huge Money Web with Sequel

By Bob Tourtellotte

Los Angeles (Reuters) - He's back, he's bigger and some critics even say he's better. But one thing is certain: Spider-Man's money web is stickier than ever.

Sony Pictures Entertainment rolls out "Spider-Man 2" on Wednesday with a production budget that industry sources and published reports have put at $200 million, and counting marketing costs Sony is looking at tens of millions more.

The movie represents one of the biggest bets in Hollywood history for Sony parent, electronics maker Sony Corp., comic and licensing company Marvel Enterprises Inc., and scores of merchandise and promotional partners.

Kellogg Co. is offering Spidey computer software with Pop-Tarts pastries, Cadbury Schweppes Plc's Dr. Pepper soft drink is giving away cars and scooters, Sprint Corp. has games and ringers for phones, and Activision Inc.'s Spider-Man 2 videogame hits retail shelves Tuesday.

The success of those products, not to mention the line of Spider-Man toys from Marvel, is riding on the shoulders of an atypical and conflicted superhero who shoots webs from his wrists, scales buildings with his hands, dresses in a red-and-blue leotard, and is one of the biggest movie hits of all-time with a worldwide box office of $807 million.

A big bet? Sure. A safe bet? About as safe as they come in the world of big-budget Hollywood movies, analysts say, because the first movie's huge success offers the sequel a loyal fan base.

The key is making No. 2 as good as No. 1, and apparently the film makers have done that with critics. "(The director) Sam Raimi has made a terrific film," writes Newsweek reviewer Jeff Giles.

On Wednesday, Raimi will be put to the test by the harshest critics, the fans, but the word from early screenings has been good.

The movie will debut in the United States, Canada and 30 international markets during its first week and will be playing throughout the world within a month.

Spidey's Financial Web

Thomas Weisel Partners financial analyst Gordon Hodge raised his global box office estimate to $850 million -- $350 million in domestic (U.S. and Canada) markets and $500 million internationally -- from an initial forecast of $600 million.

"With positive 'buzz' for the film building, we view an upside case scenario of $1 billion in worldwide box office," he wrote in a research note.

Typically, the movie's owners and distributors -- in this case Sony and Marvel -- split box office receipts with theaters owners. Over the life of a film in theaters, that split is about 50/50, although with major movies like "Spider-Man 2," owners often get a higher percentage.

What is not known is profit participation among the film's producers, actors and others. Sony and Marvel officials declined to comment on the business aspects of the movie.

The success of the first "Spider-Man" had a major impact on both Sony and Marvel. In its fiscal year ended March 2003, Sony's pictures group saw revenues rise 26 percent to 803 billion yen from 634 billion yen in the same year-earlier period. Operating income gained a whopping 89 percent to 59 billion yen from 31 billion yen.

In U.S. dollars, revenues were up 30 percent and operating income 92 percent.

For Marvel, 2002 licensing sales rose 99 percent to $79.6 million from $40 million, and licensing earnings before interest, taxes, depreciation and amortization -- a common measure of cash flow for media companies -- were up 176 percent to $69 million from $25 million.

Key for Marvel will be sales of Spider-Man toys. JP Morgan analyst Barton Crockett, in recent research, said he expects 2004 Spider-Man toy sales to nearly double from $109 million for the first movie.

Another big factor will be sales of DVDs and videos. The first movie initially shipped 6.5 million VHS tapes for gross revenue of $89.2 million and the DVD shipped 19.5 million units for gross revenue of $338.8 million, according to Adams Media Research.

Additional reporting by Caroline Humer in New York.


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