Disney's Big Character Test

But it's not just Disney's recent Pixar and Marvel success that may give credence to Iger's plan to grow the conglomerate as others like Time Warner (TWX) and McGraw-Hill (MHP) shrink. Since acquiring Marvel in 2009 - a deal that was initially viewed skeptically -- Disney's shares have nearly doubled to $46.70.

In the last five years, the company's shares are up roughly 40% compared with a near 7% drop in the Dow Jones Industrial Average. Disney has also outperformed the broader market and peers like Time Warner, News Corp. (NWSA) and Viacom (VIA) year-to-date and in the past 12 months.

Shareholders now need to figure the root of Disney's outperformance to get a better sense of whether its conglomerate plans will work, or falter and cause shares to stagnate, as they did in the bull market between the dot-com bust and the financial crisis.

Ten years ago, media conglomerates bought up studios, Web startups, networks and retail stores in a failed effort to push intellectual property through a growing number of distribution platforms, says Peter Cuneo, a principal at media investment company Cuneo & Co. He blames failed cross-synergies on weak content, likening industry efforts to fueling a Ferrari with regular grade gasoline.

Previously, Cuneo headed a turnaround of Marvel as it emerged from bankruptcy in the late 1990s and early 2000s, and was vice chairman of the company when it was sold to Disney for $4 billion in 2009.

In experiencing Marvel's evolution into a factory for blockbuster movies, Cuneo cites the company's decision to use motion pictures to breathe new life into its comic book characters as a reason why Disney will now benefit from its ownership.

When Disney bought Marvel, Viacom's Paramount unit had distribution rights for Iron Man and other Marvel-inspired films. Meanwhile, Sony (SNE) and Twentieth Century Fox hold the film rights to Spider-Man and X-Men films in perpetuity, meaning that Disney doesn't see an ownership benefit.

While Spider-Man and X-Men are ubiquitous characters and their on-screen success isn't surprising, Cuneo points out that Marvel's Iron Man movies revived an action hero that had vanished into obscurity, with a big studio and comic books payoff.

Disney will need to replicate that type of success with some of the thousands of lesser-known Marvel characters for its acquisition to truly be a blockbuster deal.