A revolving line of credit with a bank. Basically, bank says you have (to make up some numbers) revenues of $15,000,000/year and profits of $5,000,000, so we think it would be pretty safe to lend you up to say $1,000,000 that you can borrow whenever you want to run your business and you'll pay it down on some agreed upon interest rate (which is likely not fixed, but some percentage over prime rate[1]). Notably, you don't have to borrow, it's just available with pretty much no questions asked whenever you need it. Kind of like a credit card, but with a lower APR. It's very commonly used even for profitable businesses since cash inflows often don't match expenditure flows, especially if your company is growing.
For example, maybe you grew your company a lot this year and ran out of money in November, but a bunch of your customers will be paying you large sums when annual renewals renew in January. You can't just not pay employees in December, so you borrow for a month or two in order to smooth over payroll and other expenses and then pay it back in January.
Typically, a revolving line-of-credit is going to help with month-to-month expenses, but won't be enough to massively grow your business. For example, if you are a startup, a bank won't give you nearly as much money as a VC, but at the same time, you probably don't want to give up equity in your company every time you are temporarily behind on payroll. If you are a very large and established company, you'll likely have other, cheaper ways of getting money for your day-to-day business. For example, Commercial Paper is basically a short term bond issued by large well-known and creditworthy companies that need to smooth over payroll and other operational expenses. But by the time you are doing things like that, you probably have an entire corporate finance department handling these sorts of things. A revolving line-of-credit is much simpler.
[1] prime rate is the interest rate that big banks can borrow at which is typically lower than what you can borrow at. They'll borrow at rate Y and charge you rate Y+Z.
I don't know much about this, but some quick research shows that it was actually for $525 million [1], and interestingly, they put up their intellectual property as collateral ("a batch of 10 Marvel characters, including Captain America, the Avengers... and Nick Fury").
It's worth noting that a line of credit can be against the business itself, the owner of the business, or it can be backed with specific collateral, such as stocks, for example. If you are large enough, the bank will get creative on what you can use as collateral, although I'd imagine that in general it's easier to borrow against a Manhattan office building (many possible buyers) than the intellectual rights to comic-book characters (very few possible buyers).
It's interesting that they were able to use creative assets as collateral but also the creative assets that would be worthless in a scenario where Marvel was unable to pay back the line of credit. If the movies do well, no problem. If they tank, who cares about the IP?
This is one of the many reasons I am not in finance.
I believe that by this point Sony had Spider-Man and Fox had X-men, both of which had proven to have legs. There was likely little doubt that a collection of other tried-and-true titles were worth a significant amount, even if Marvel Studios themselves failed to make a hit.
This is established IP in an adjacent media. Marvel first line of business used to be comics which in turn generated sales for tie-in products. In this context it was probably relatively easy to see how much these IP made every year.
Makes sense. The value is based on the IP assuming there is no successful movie franchise. Probably with some risk calculation as to the probability that the films would be successful.
A revolver is a line of credit that companies use for financing. You can think of it almost like a credit card for a company — they make some general purpose agreement with a bank for $X of credit at y% interest, and can use that at their discretion. Companies generally raise debt through specific bond offerings, so this is just a quicker way for them to tap capital instead of going to market each time.
In case the other answers are not obvious enough, a term loan is borrowed once; you borrow $X, and the pay it back before the end of the term. A revolver for $X can be tapped and repaid many times, so long as the total borrowed amounts outstanding at any one time do not exceed $X.
In addition to the other explanations it might be interesting to know that high net worth individuals tend to make heavy use of these. They have extensive collateral that is often less than fully liquid. They can borrow a relatively small amount compared to their holdings and fund most of their day to day costs from their line of credit. Paying down the line can be done in a tax advantaged way. The math works out that they may pay low or even no taxes as a result.
For example, maybe you grew your company a lot this year and ran out of money in November, but a bunch of your customers will be paying you large sums when annual renewals renew in January. You can't just not pay employees in December, so you borrow for a month or two in order to smooth over payroll and other expenses and then pay it back in January.
Typically, a revolving line-of-credit is going to help with month-to-month expenses, but won't be enough to massively grow your business. For example, if you are a startup, a bank won't give you nearly as much money as a VC, but at the same time, you probably don't want to give up equity in your company every time you are temporarily behind on payroll. If you are a very large and established company, you'll likely have other, cheaper ways of getting money for your day-to-day business. For example, Commercial Paper is basically a short term bond issued by large well-known and creditworthy companies that need to smooth over payroll and other operational expenses. But by the time you are doing things like that, you probably have an entire corporate finance department handling these sorts of things. A revolving line-of-credit is much simpler.
[1] prime rate is the interest rate that big banks can borrow at which is typically lower than what you can borrow at. They'll borrow at rate Y and charge you rate Y+Z.