The Latest on Perseus, PGW & AMS

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Posted on January 30, 2007
Filed Under AMS Bankruptcy

A former Perseus employee has emailed me, observing the following: Perseus is more concerned with the distribution end of the business rather than the publishing end. This reader also suggests that Barnes & Noble, which sometimes excludes particular titles that aren’t distributed by Sterling, is a shadier example of vertical integration than a prospective PGW/Perseus merger. (As an anonymous publisher reported to Holt Uncensored back in 2003, Sterling began to cut orders from 500 or more down to 100 or less for publishers who weren’t “team players.”)

Because B&N has been able to maintain such a business practice along these lines without any apparent antitrust suits (at least none that I am aware of), this may set a Perseus-friendly precedent for any prospective Perseus-PGW merger. Indeed, I suspect it would be quite easy for a lawyer to craft a disingenuous argument suggesting that an antitrust situation would only exist if an entity controlled all three aspects of the book business: publishing, distributing and selling.

This reader goes on to suggest that Perseus has “found the loophole” by focusing its efforts on book distribution. After all, assuming that your accountants haven’t underreported revenue or hidden the cash a la Sorrento Mesa, book distribution makes money.

A large question mark now hovers over a definitive Perseus-PGW coupling. This morning, PW’s Jim Milliot reports that there were two additional offers in addition to Perseus’s. AMS’s primary lender, Wells Fargo Foothill, however, has permitted “one more opportunity to consummate a going concern sale.” (And has one of the two offers, as Radio Free PGW suggests, come in from the Chas Levy Company?) AMS, meanwhile, has postponed its annual meeting (apparently, “annual” means little to AMS; they haven’t held an “annual” meeting in four years) to February 23, due to shareholder Robert Robotti’s resignation.

The Book Standard’s Kimberly Maul reports that Robotti has been replaced by Marc E. Ravitz as AMS Director, coming in from Grace & White (who had a 10% stake in AMS in 2006).

McSweeney’s has issued a public statement, noting, “From here on out, the slate will be clean again and you can count on the standard percentage of your book-buying dollars to go to us publishers. What’s that you say? Would it help for you all to buy books now, during this lean time? Well, sure—it would. We and all the others in this situation do best with these direct transactions, and we promise to deliver top-notch books in return.”

Meanwhile, the publishers have until February 7 to file objections to buyout offers — this, as Perseus’s 70 cents on the dollar offer to indie publishers in exchange for four years of distribution lays on the table. It remains uncertain whether the other two buyout offers have instituted a similar form of ~~blackmail~~ distribution bailout, but I’ll be tracking all developments as they come.