Yesterday, I wrote about my nervousness over Marvel's (NYSE: MVL) The Incredible Hulk. Today, I'd like to talk about how I wouldn't be so nervous if the Iron Man sequel ended up being directed by someone other than Jon Favreau. There are two excellent articles on The Motley Fool discussing this issue, one by Nathan Alderman and one by Marvel expert Tim Beyers. At the time those articles were published earlier in the week, it had seemed that Marvel was reticent about ponying up a higher compensation package for Mr. Favreau on the heels of the awesome success of the first movie starring Robert Downey, Jr. David Maisel, chairman of Marvel Studios, apparently wants to be very conservative about the company's above-the-line costs. Alderman thinks Marvel should give Favreau the requested raise, while Beyers understands the Hollywood dynamics going on and can see why both sides are doing what they are doing.

By the time my own piece is published, it's possible Favreau may be confirmed as the director of the second Iron Man (as I write this, there are rumors that a deal has been offered). Regardless of what happens, I'd like to offer my opinion on whether or not Favreau is an absolutely necessary component for an Iron Man sequel.

He isn't. And if shareholders think he is, then they had better rethink their investment in Marvel. What shareholders must ask themselves is this: Is it the director that is responsible for the ultimate success of a Marvel film, or is it Marvel management and the intangible value of the Marvel intellectual-property portfolio? Which element adds more equity? As far as I'm concerned as a shareholder, I'm investing in Marvel. I'm not investing in Jon Favreau. Any investor who believes that any one director is indispensable is going to be in for a stomach-churning ride, because when the day comes that a Jon Favreau or a Sam Raimi (he directed the Spider-Man flicks) decides that Marvel is no longer paying them what they're worth and jumps ship, the stock could easily see an overreaction sell-off.

Lions Gate Entertainment (NYSE: LGF), the little studio that makes big waves in Hollywood with franchise hits such as Saw and Hostel, distributed its annual earnings numbers on Friday after market close. For fiscal 2008, revenues leaped like a lion (you knew that was coming, don't kid yourself) to $1.36 billion, which represented top-line appreciation of 39%. So far, an excellent start. But, it's the bottom line where things start to get ugly. Lions Gate reported a net loss of $0.62 per diluted share; in 2007, the studio booked net income of $0.25 per share. That can't be pleasing to shareholders. According to Marketwatch, Lions Gate did not meet expectations, as some on Wall Street believed the loss would be closer to $0.50 per share (the company did beat on the top line, though). Things were rosier for the fourth quarter, as revenues jumped over 50% and net income climbed 19% to $0.22 per share. Unfortunately, expectations were again too high, as analysts were hoping for $0.37 per share.

The cash flow is a little more pleasing. Operational cash flow increased just shy of 50% to $89.2 million. And the company adjusted this stat even further to come up with a free-cash-flow figure of nearly $137 million (the company adds back the effect of borrowings for production obligations). The huge problem here is a familiar story: rising costs for marketing and distribution. This isn't unique to Lions Gate; competitors such as Disney (NYSE: DIS), Time Warner (NYSE: TWX), Viacom (NYSE: VIA), and Sony (NYSE: SNE) all face this same issue. Management reported that costs for Lions Gate in this regard rose well over 100%.

Lions Gate is a tough one for me. Here's the thing: I love the movie business, and Lions Gate is definitely a more direct play on the business than what you get through a Disney or a Time Warner due to the scales involved. Lions Gate has some great franchises under its belt, and it tends to go for niche, edgy content. Plus, the cash flow is pretty cool.

According to The Wall Street Journal (subscription required), Viacom (NYSE: VIA) really wants to keep Steven Spielberg in its studio roster.

The media company is due to make some righteous bucks from Spielberg and his new Indiana Jones flick, which is set to hit theaters in a couple months. CEO Philippe Dauman wants to correct any missteps he made in his relationship with the extremely famous and powerful director after perhaps not singling out his importance as much as he should have in comments made at a conference last year.

I'm a big fan of Steven Spielberg; the man definitely knows how to make money. But, I do have to confess that, when it comes to chasing big, expensive stars, I think CEOs of studios must consider two things: 1) success in the movie industry is so random that every project represents extreme risk, no matter who is attached; 2) it is the deal that matters most; or, put another way, it is the return on invested capital that must be chased, not the celebrity of a certain individual. Say what you want about Disney (NYSE: DIS) and its movie-making ways, but keep in mind that the company does focus on ROIC, to its credit.