Interview conducted September 5, 2001 by Milton Griepp.*
15.Is DC going to buy Diamond when it has the option to do so? We've no plans to buy Diamond now or at any time in the future. It's hard to rule out that there could be some circumstance where it would make sense, but we don't think we'd be enormously good at running that kind of business. The guys there know what they're doing. It's a kind of business that doesn't further our primary mission. We're in the management of creative properties, ideas, and development. If you go back decades, we used to own our own printing presses. We owned our own distribution operation. Over the years we've hollowed out.
16. This summer and spring it seemed as if DC was quiet while Marvel had a lot to say about competitive issues. I'm thinking about things like reorders, the Code, and the different stances that the companies take on that. At San Diego it seemed like DC came out more aggressively, comparing DC to its competition with Bob Wayne's speech at the Expo. What do you think of the tone of the discourse between Marvel and DC over the past six months? You know from your own experience that we've had a fairly frank conversation with our distributors and retailers over the years about why we did certain things and how we saw the industry moving. I don't think that's changed. We've not generally believed that the comic book industry has done itself a favor by talking about business in front of the consumers. The industry's had a tendency to agitate consumers and, I believe, to disaffect them by trying to shine a spotlight behind the curtain and point out where the lifts and the joists and everything was creaking, as opposed to, 'Watch the nice actors on the stage tell the show that you're there to see.'
The particular timing of Bob's San Diego speech, coming after Joe's keynote speech, made them seem like they were more connected than they logically were. We try to be honest with people about what we're doing and why we're doing it. We'll continue to do that. We don't see that as needing a very wide stage. You've been in the room with me spieling about the state of the industry many times in many different circumstances. I think you know it's not my personal approach to spend a lot of energy arguing about what the other guys are doing. We need a number of successful publishers for this to be a successful industry. Traditionally, both DC and Marvel have been very important to that. I think we probably both will be for the long run. Hopefully we can play nicely with each other through most of those years.
17. You allude in your answer to that question about business issues being better handled in private or at a business level rather than at a consumer level. One of the ways in which the business has become more transparent in the last year has been with regard to comic circulations. ICv2 regularly publishes estimates of initial North American orders based on the Diamond indexes (see 'Top 300 Comics -- September') There are other places that use different methodology and come up with different numbers. What do you think of all this? As one way to end the discussion of what the right numbers are, would DC consider releasing its actual circulation numbers? There are two separate questions. I understand peoples' desire to analyze the business and to set up different models to try and do it. Some people do fairly good models for fairly defined situations--the numbers may be exactly right or exactly wrong, but they're workable models. We have a couple of models in the industry that are pretty crappy for what they set out to do--none of yours that I've run across, unsurprisingly, given the interest you've had in mathematical precision over the years. I don't remember whether you were the first to run the indexing of new titles out, but I think you were the first one to do that on any kind of widespread or systematic basis in your Capital days, which was helpful to us and helpful to the retailers. A lot of that data serves some purpose for different groups.
Part of the reason we don't release our circulation numbers is there's no magic moment when they're right. You end up getting more agitation than anything else from people calling and saying, 'Is that what I'm going to get my royalties on?' 'Did I only sell that? Last month I sold this.'
Just as a side note, when we put up our first month's estimates of circulation, the first comment we got was from a creative person: 'Wait! That doesn't match my royalty statement.' People look at the snapshot and try to compare to their own interaction with those numbers, and that's not always a good fit. That's one of the problems. The second problem is we've proposed a number of times over the years through industry trade organizations to do some form or another of certified numbers for the industry. Everybody would send his or her numbers to some common source and there'd be some audit ability. We've never managed to get a program like that off the ground. That has a number of potential benefits to the field. Matt Ragone had come up with the very constructive suggestion that if we pulled something like that off, we could do our equivalent to gold and platinum records and say to the trade and the world, 'Look this is a genuine hit.' as opposed to, 'I'm labeling this as a best-selling sell-out, whatever the hell it is, but may or may not mean it's sold more than three copies in Nebraska.' Unfortunately, given the enormous disparity between the sizes and structures of publishers, that hasn't seemed worthwhile to everybody, and it hasn't been equally practical for everybody. You need a fairly level playing ground and a fairly policed playing ground to do something like that. We'd be very interested if one ever came up.
Maybe that's something ICv2 could look into--you need an independent third party. I know the card industry does something like that with at least the totals. I don't know that they do it with individual releases. There are annual results prepared for all channels combined for the trading card business and people know how many dollars were sold and what the trends were and what categories they fall into. I think the whole industry finds that very useful. It's a healthy thing if you have some commonly accepted scoreboard. It removes the degree to which players periodically make up their own standard on which they ought to be judged. It also lets someone who being mutually agreed upon is invested with a credibility to say, 'You know this is really the fair set of rules on which people ought to be judged.'
An issue that's gone on several times in the history of the industry in the difference between the pre-order business and the final sales level of business. Ten years ago, you remember the period in which there was a lot of controversy because in particular Image's market share seemed to be massively higher than it really ever was because they were having tremendous problems actually producing the product. Much more stuff was solicited or re-solicited than was delivered in any particular month. They overcame that; that's not a major issue in their lives today. But you had a period there where maybe they weren't deliberately doing anything, but there was a distortion in the information because the best information available at that time was the initial orders and they just didn't work as the standard to judge by. Initial orders have certain validity. Final sales certainly have even greater validity because it's what actually gets sold to people. There's a bunch of other ways you can slice it. It would be a great benefit if you could get everyone in the same room and agree to the same system.
Then of course there's the additional issue that the publisher information is only sell-in, and sell-through is a different matter. Absolutely. If you could ever get something where it was sell-through, that would be fabulous. That's information that's totally unavailable in comics that many other industries have very good forms of, and are prepared to pay quite well for.
18. Over the last ten years, there's been very rapid change in the comic business. That pace of change has slowed over the past several years. I think that's been a source of relief for retailers who were challenged by having to adjust to those periods of rapid change. As a result of that history, retailers are sensitive about the potential for turmoil and unexpected change. It's an important question we ask on their behalf: what are the prospects for stability at DC? Would anyone on earth want us to be much more stable than we have been?
I think people look at DC as one small part of this now even much larger, huge, giant company and think that somewhere in the company someone could be thinking something about DC that doesn't see the whole picture of the value of the business. Those are the kinds of things people worry about with DC. I wanted to get your perception of the degree of potential for some rapid change that's going to hit people on the side of the head that they're going to be surprised by. We live in a world in which there is always what is called event risk. Letterman had the Marines parading out front yesterday. They could take a wrong turn and come charging up the steps and wipe us all out. We've been at this a long time. We've been going in some very specific directions for a long time. We expect to continue doing so.
19.What are the major DC movie projects in the pipeline? I can't give you very much on that because that's not what I do. We have a tremendous list of stuff rolling in the movie and TV area right now.
What's coming out next year? Let's start with the stuff you're planning publishing around. We have no movies on our plate for next year. The most immediate stuff we have coming is the TV stuff. The launch of Smallville is this fall, which looks very cool. We have Justice League as the next project after that, launching in November on the Cartoon Network.
There's an army of things coming up, but by the nature of our structure as a company, unlike a lot of other publishing houses, it's really not a benefit to us to be announcing to the world every time we sign a contract for the development of a project. We really start pushing it when we've got some guess of the date when the cameras are going to roll and it's going to be in the theater. We're not at that stage on any of our superheroes right now. We'll let you know as soon as we know.
20.You mentioned your tchotchke business. DC has gotten to be a pretty big producer of toys and statues on our best-seller lists--your statues routinely end up clogging the top ten. I'm curious about whether you see that continuing to grow, or whether it's capped out as the percentage of the total. What do you see as the future of this toy and statue business, for DC and the industry in general? I think it was a great gift to the industry from Todd [McFarlane]. He deserves extraordinary credit for it. I know we would not be in this line of work if it weren't for the model he built for how to develop it, and we're very grateful for that. As our audience has aged, this has become a very perfect complement. We've found an ability to give people something that they've wanted for literally ten or twenty years and that they bring a great passion to. Part of that has been by producing a premium product at a premium price for a modest audience. Part of it has been due to some terrific creative work from, in our case, a team led by Georg Brewer, who makes something that you really want on your shelf. Our first half of the year versus the prior year, that was probably the largest growth area of our business by a mile. Like most things that are growing at precipitous rates, you assume at some point it will start leveling out, but I don't think we're there yet. We have a very cool new product format that we're going to introduce spring of next year in-store. The sampling program is for the end of this year, when we'll be distributing to retailers and to consumers some free samples of a whole new line in that business that's just an enormous amount of fun. We're very optimistic about that giving us a whole new scale to work in.
It sounds like you think you can still grow some more. I think so. I think we can grow all our businesses. Each has its own challenges, but this stuff is fun. At the end of the day when you grab someone on the street, and you show him or her what it is we do, an awful lot of people respond saying, 'I'd like that.' Not all of them are willing to come where we sell it. Not all of them like the particular stories or the way we tell them, or the price we sell them at, or the format we put it in, or the particular character, but comics remains as beloved a medium as any. We're learning how to use it to tell a wider range of stories, to touch a wider range of genres, to reach different people. I think there's an awful lot we've still got to do.
Great. I think that's a good note on which to wrap up. Anything else you want to say to the people who will be reading this? (Laughing) Thanks for letting us avoid honest work all these years.
We also submitted a written follow-up question regarding a rumor we'd heard after the interview -- that Levitz was planning to retire and take up the project of indexing the entire DC Universe. We got this response: 'As to my future, I've fantasized about 'retiring' to write and teach for several years now, as most of my friends know, but there's no current plans to do so. And I think my days as a comics indexer ended decades ago...neither my eyes nor my patience are what they were then...'
For Part I of this interview, click here.
For Part II of this interview, click here.
*A number of times in this interview, Levitz refers to the interviewer's past life. In that life he was co-founder and CEO of Capital City Distribution, at one time one of DC's largest direct distributors and a DC customer from 1980 to 1995.
Levitz declined to answer two questions, for which others were substituted. One asked whether there were any circumstances under which DC would acquire Marvel. The other asked about changes at DC since the AOL-Time Warner merger.
