A candid and personal examination of the Philippine comics scene from a social, cultural, economic and business point of view.

Monday, November 07, 2005

When corporations lose or have no faith in comics publishing

As one reads more about the history of some comics publishing companies, one will see a common thread develop. And that is, as the comics publisher ceases its main focus of comics publishing, or of diverting and sharing that focus with other commercial ventures, readership and patronage of their printed comicbooks decline.

In America for example, we have the comics duopoly of DC and Marvel Comics. From the late 1930s to the late 1960s, DC and Marvel were closed, near-family corporations. DC was owned and controlled by the Donenfeld family (Harry and his son, Irwin) and Jack Liebowitz while Atlas/Marvel was owned by the Goodman family (Martin and his son, Chip). Stan Lee was a cousin-in-law of Martin Goodman. During this time, the family business was entirely and solely focused on the business of comics publishing, specifically in the commercial activity of dominating the comics reading market in the newstands. Each of these publishing companies even had their own distribution company that specialized in the distribution of their comics magazines nationwide.

However, in 1967 DC was sold by Liebowitz (who now owned DC after the prior death of Harry Donenfeld) to the Kinney Corporation who was into funeral services and parking, among other business interests. Kinney later bought Warner Brothers-Seven Arts, and became a publishing, movie, television, electronic games (Atari), and record entertainment business conglomerate called Warner Communications Inc. with DC Comics, Mad Magazine, Independent News, and Warner books forming its Publishing Division. Goodman on the other hand, likewise sold Marvel in 1968 to the Chemical and Film Corporation later called Cadence Industries who was basically into the film and printing business (related at least to comics publishing). Cadence, a much smaller firm than Warner, was composed of Marvel, Curtis Circulation, Magazine Management, Hudson Pharmaceuticals, U.S. Pencil, Saxon Theatres and Alexander Film Services. Goodman was retained by Cadence to head Curtis Circulation Magazine Management (until he later broke away to form his own company, Seagate, publishing the short-lived "Atlas Comics Group"). Cadence' publishing division was composed of Curtis Circulation, Marvel, Magazine Management and (three subscription departments). Curiously, when these corporate mergers took place, newstand sales of DC and Marvel comics began to decline until it became more acute in 1975 onwards.

Joe Brancatelli, a business journalist hired by Publisher Jim Warren in 1974 to run an impartial business column on the American comicbook industry appearing on all the WARREN black and white magazines, observed in 1977 that though Warner and Cadence made a rosy picture of increased profits in each of their publishing division's overall performance, there was no particular improvement in comics newstand sales which continued to decline. Brancatelli's observations were based on the annual corporate reports to stockholders of Warner and Cadence, thus:

"While the Warner annual report bubbled enthusiastically about the performances of Mad, Independent News and Warner books--not to mention the lush profits turned by television, movie, record, cable TV and the electronic games divisions--it had nothing of financial substance to say about DC's sales and profits in 1976. Despite lusty applause for the rest of the publishing group, DC was only credited with an ability to "delight readers"--and the corporate hope that the 1977 "sales potential for comic books" would improve because of the impending Superman movie and the new dollar-sized books.

In the warped world of annual reports, where hysteria equals profitability and "sales potential" of another year equals poor performance, Warner's treatment of DC is tantamount to an admission of near disaster. Since Warner isn't legally required to report sales and profits of each individual group, no one knows exactly how bad the situation is. Keep in mind, however that one DC war book sold only 100,000 copies per month in 1976 and that's surely something of a modern-day low.

It's also of interest to note that while Warner is financially and corporately stronger than Cadence--about 30 times more profitable and nine times as alrge in sales volume--its publishing division is much less important to the company than Marvel/Curtis/Magazine Managemetn is to Cadence. Whereas Warner Publishing accounts for only 6 percent of total Warner sales and 9 percent of Warner's total profits, Marvel et al has considerably more attractive contributions of 52% of Cadence sales and 86% of Cadence profits. Cadence, therefore, is primarily a publishing concern, while Warner's involvement--and continued interest--in periodicals could only be termed "marginal".

One other point to keep in mind about Warner vis-a-vis Cadence: Warner Publishing is only a million or so dollars larger than Cadence Publishing despite the dwarfing size of the Warner conglomerate. The companies are fiscally identical competitors in publishing circles.

At Cadence meanwhile, board chairman Sheldon Feinberg took pains to mention Marvel's "turn around" and "significant gains" in 1976 in his letter to the stockholders. What he didn't say, however, was that the improvements were apparently not in newsstand sales, the lack of which had been vexing the House of Ideas in 1975. Explaining the division's sterling financial status, Cadence credited higher sales at Curtis, but mentioned only "increases in cover prices...royalty income and a lower rate of returns" at Marvel.

In understandable terms, whatever improvements were made at Marvel came by virtue of the fact that they raised comic prices, made additional non-comic-book sales (to newspaper synidcates, TV and movies), cut printing costs by lowering the print runs and subsequently had less books returned unsold since less were printed in the first place. Sales, Cadence clearly implied by omission, did not improve significantly, if at all. That is especially interesting since Cadence had been publicly admitting that sales in 1975 were slumping. It also indicates the company decided to print less comics in 1976 rather than trying to sell more." (Emphasis Mine) (Source: "The Comic Books" by Joe Brancatelli, Creepy No. 92, October, 1977 issue)

Since both DC and Marvel were now controlled by different owners who either focused their attention to other commercial ventures; minimizing their participation in comics publishing, or were altogether not that well-adept at handling the business of comics publishing. The former situation would apply more to DC/Warner's situation while the latter to Marvel/Cadence's predicament.

In 1975 for example, after sales of DC comics suffered heavy newstand losses due mainly to a marketing and distribution ploy by Marvel, Warner executives became wary of comics publishing and fired its then publisher, Carmine Infantino, and drastically cancelled a lot of their titles, cutting down on comics publication and began what was infamously known as the "DC Implosion". Marvel on the other hand, became the no. 1 comics publisher in America, but not after its flooding the newstands that it saturated the newstand comics market leading to a decline in comics sales by late 1975 to 1976.

As a consequence, Warner minimized its comics publishing business, infusing little or no funds to DC and concentrated on forming and promoting a soccer team: The Cosmos, and concentrated more on obtaining revenue from its movie, television, cable TV, electronic gaming, and record business, and on occasion from their licensing of the images of famous DC comics characters to other media formats. Cadence on the other hand, suffering a huge loss, was later sold to a new company who was not even into comics publishing and minimized infusing money and support in that department. It was this time that sales of Marvel Comics began to dip considerably. They were still publishing more in volume when compared to DC but their sales were spiralling.

So what saved Marvel in the late 1970s? According to the account of Marvel's then President, James Galton, and Editor-in-Chief, Jim Shooter, it was licensing. Specifically, the granting to Marvel Comics of the license by George Lucas to exclusively publish in comic book format his all-time blockbuster movie: "STAR WARS". Yes, it was the STAR WARS comic (and later licensed comics based on toys and movies) that kept Marvel afloat and away from bankruptcy.

Concurrently the other factor that saved the American comics industry was the indirect, almost fluke, development of the comics direct market. But this interesting sidenote on the business of comics distribution has to be reserved for another time. Suffice to say, and by way of summary, DC and Marvel have since obtained their revenue not from comics publishing but from licensing. The reason? Part of it is that its corporate owners are not focused, lack knowledge and enthusiasm, in comics publishing. It is their experience and opinion that more money is to be had from licensing their comic characters' images than from print publishing. Comics publishing consequently, has become a means of enhancing the profitability of its licensing activities. Properly, it should be the other way around but things seemed to have been perverted along the way.

This little background history on the American experience is relevant when we turn back our attention to the Philippine comics industry monopolized by the Roces family. When the komiks publishing business was passed on to the third generation of the Roces clan, i.e. the Davila and Guerrero grandchildren of Don Ramon, these people were all not interested or had any inclination at all in comics publishing. At best they did not even develop any managerial acumen specializing in the area consequently leading to the closing down of most of their dummy comics publishing houses and their selling of some of these dummy comics companies to new owners who were either disinclined, or looked down on comics publishing.

Atlas Komiks for example, was sold off by the Roces-Davilas to Benjamin Ramos of National Bookstore. National Bookstore is not into comics publishing in a big way, as the first and second generations of the Roceses were. That is not National's owners' inclination. Its main forte' is "book" distribution and sales (particularly of school and office supplies). It has no specialized expertise in cheap comics publication especially when distributed in the banketa newstands. Even Atlas' old comics personnel who were absorbed by National Bookstore, did not possess the managerial acumen or expertise to steer Filipino komiks publishing into the 21st century. Imagine: selling a cheap looking banketa Filipino komik in air-conditioned, first class bookstore branches of National frequented by class A, B and C readers. No wonder these cheap and raggedy Filipino komiks couldn't find its audience in that high class crowd.

History's moral: comics publishing is a harsh mistress. It's either you stick with her or you don't. Just look at the comics industry in Japan where manga comics publications comprise 40% (but TIME Magazine says 20%) of its yearly publication output. Now THAT's devotion to comics publication.

(Sources: "Men of Tomorrow: Geeks, Gangsters and the Birth of the American Comic Book" by Gerard Jones, "Stan Lee and the Rise and Fall of the American Comic Book" by Raphael Jordan and Tom Spurgeon, "Comic Wars: Marvel's Battle for Survival" by Dan Raviv, and "Comic Book Artist Collection Volume 1", edited by Jon B. Cooke)


Post a Comment

<< Home