Digital Publishing News: Borders Bankruptcy; Amazon and The Book Depository
Digital Book World presents a roundup of some of the most interesting news, commentary, and tweets related to publishing that you may have missed, from all over the digital book world.
Is the Borders Bankruptcy Saga Finally Going to End?
Sunday was the deadline for potential bidders to line up for the Borders bookstore chain, but no one stepped forward: Is this the last gasp of a dying retail empire? Without the guarantee of “stalking horse” bidder private equity investor Jahm Najafi, this week might be the final end to Borders, as the bankruptcy-court auction scheduled for Tuesday inches ever closer.
UPDATE: According to Reuters, Borders has canceled their Tuesday auction and instead will liquidate 399 stores. In a statement, Borders President Mike Edwards said “We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now.” Bloomberg reports that Borders landlords and creditors, including Kobo, have filed objections to the liquidation.
Before the weekend started, Edwards sent this letter out to employees, announcing the withdrawal of Najafi as the stalking horse bidder.
Why had Borders’ creditors objected to Najafi? Publishers Weekly has a useful run-down of creditors’ objections to the Najafi bid, but the New York Times blog DealBook has a direct link to the creditors’ court filing detailing objections, if you’d like to see for yourselves. From The Wall Street Journal on the latest in Borders’ bankruptcy woes:
But creditors, including publishers and landlords, objected to the bid’s structure, saying it would allow Mr. Najafi to liquidate Borders after he bought the company. The creditors argued that a backup bid from liquidators led by Hilco Merchant Resources and Gordon Brothers Group that could pay them between $252 million and $284 million made for a better deal….
Mr. Najafi, whose Direct Brands unit owns Book of the Month Club, had been willing to relinquish the clause in his offer allowing him to liquidate Borders to appease creditors. But in exchange, he wanted large publishers to commit to shipping merchandise to Borders on normal terms that allowed bills to be paid later instead of right away. Mr. Najafi wanted those terms so he would have a level playing field with rivals such as Barnes & Noble and Amazon.
At least one publisher wouldn’t budge, and Mr. Najafi declined to alter his terms. Borders then pivoted to naming liquidators the opening bidders in the chain’s auction.
Tomorrow’s court-supervised should open with a bid from Hilco Merchant Resources and Gordon Brothers Retail Partners LLC, a coalition of liquidators. According to Portfolio.com, others, Najafi included, may also submit bids.
A little bit off the beaten path, David Johnson over at Business Insider has a quick context piece about the “liquidation business” and about how bankruptcy procedures have changed since 2005.
On a more local level, let’s not forget that there are 399 remaining Borders stores and the jobs of 11,000 people are at stake. Municipalities are preparing from the worst, anticipating major shutdowns, as in this look at the remaining stores in Boston. As reported at Crain’s Detroit Business, in Ann Arbor, Michigan:
Landlords of the 22 local stores are watching the case closely, as it may mean their leases could be terminated and they would need to find new tenants.
“In general, the operators of the stores have been looking forward to the potential of a successful bidder to operate the stores,” said Paul Magy, an attorney with Southfield-based Kupelian Ormond & Magy P.C. who represents 15 operating stores.
“But it’s not a foregone conclusion that it won’t be the case.”
Will Amazon Buy The Book Depository Over Objections?
A few weeks ago, Amazon announced that its intention to acquire UK-based online bookstore The Book Depository, which according to some reports, offers more than 6 million print titles and ships to over 100 countries. But, as The UK Booksellers Association and Publishers Association both express their objections, and while the UK government’s Office of Fair Trading reviews the acquisition (statement expected August 30), it seems worthwhile to take a look at Amazon’s strategic move and what it might mean for the global book publishing landscape.
About opposition to Amazon-Book Depository merger, via TheBookseller.com:
The Office of Fair Trading (OFT) is investigating the acquisition, which is likely to be the largest the book industry has seen since the government body probed Waterstone’s takeover of Ottakar’s in 2006. According to the OFT, Amazon and The Book Depository submitted themselves for investigation, a way of speeding up the process. The OFT has twice recently referred bookselling mergers to the Competition Commission—Waterstone’s acquisition of Ottakars, and Woolworths’ purchase of Bertrams—with the CC eventually clearing both.
The BA, which had a neutral stance on the former, but opposed the latter, said it would make a formal submission to the OFT opposing this proposed acquisition. The Publishers Association is also thought likely to oppose the deal and is asking for its members to submit representations to the OFT or to the PA, which will compile a joint submission.
Speculation about Amazon’s motives comes from blogger Nate Hoffelder:
I’ve been watching TBD for a while now, and it was clear at least 7 months ago that they were outcompeting Amazon. This purchase happened for much the same reason as Woot, Zappos, or any other time Amazon bought out the competition. Basically, Amazon bought The Book Depository because they did the job better in that one niche.
Of course, the other interesting detail here is that the folks at Amazon clearly don’t think paper is dead. Otherwise they wouldn’t have invested in The Book Depository.
Looking at both Amazon’s and The Book Depository’s motives, Ingrid Lunden over at PaidContent.org believes that Amazon is “trying beef up its long tail cred with some direct in-house expertise, rather than simply relying on its third-party reseller network,” while for The Book Depository,
… [The Book Depository] intends to continue operating as an independently. It’s not clear what impact that will have on pricing.
Nor is it apparent whether The Book Depository will continue forward with its current business model focused on the long tail of books. Or, as the company itself describes it, “‘less of more’ rather than ‘more of less’”, a deliberate snub of the bestseller-drive of more mainstream sites.
That’s just a taste of what you may have missed this week. To stay on top of the most interesting news, commentary and tweets related to publishing, keep in touch via our RSS feed, follow us on Twitter, join your publishing colleagues in our LinkedIn group, and connect with the broader DBW Network.