Thursday, December 23, 2010
Barnes & Noble under attack
LOOKING AHEAD by Wally Dobelis
Our East Midtown has always been a book country, with a Barnes & Noble book emporium near by everywhere, Cooper Square to Murray Hill, the headquarters on 17th Street just east of Broadway and the superstore on corner 5th Avenue and 18th Street. If that were not enough, The Strand, reportedly the world’s largest antiquarian bookstore, the lone survivor from the famous America’s Book Row, is on the corner of Broadway and 12th Street.
The Book Row book world has been changing since the 1950s, first by real estate development on Fourth Ave south of 14th Street driving out the low profit antiquarian stores. The rise of B&N and subsequently Borders, with superstores offering comfortable reading areas, free author lectures, huge stock and good discounts drove out a lot of new book stores, only to be attacked by Internet book sales on the Amazon site, soon joined by B&N itself. The recession did not help, libraries became widely popular, carrying multiple copies of popular titles, particularly the crime writers
Now our book paradise is under a new threat, called e-books. Although the tablets are still under development, Amazon’s original Kindle is attracting fiction readers at $10 a volume, and the ever-ready-to-join B&N has added its e-reader, Nook, at competitive prices. Recently Apple’s iBook and bookstore jolted the fray, and now the Google steamroller has moved in, as of December 6 activating its retail store with its huge stock of some three million books, most copied from university libraries, particularly the five centuries of non-copyrighted titles, acquiesced to by the librarians in the interests of protecting knowledge from getting lost. Google’s books aim to be accessed through any web browser, and to connect to any device, a lot of them free of charge. What role the public libraries will play in this part- fee based and part-free environment is yet to be fully developed.
Barnes and Noble has been further bothered by costs, losing money in new ventures and store expansion. An activist investor, shopping mall billionaire Ronald Burkle tried a takeover, and in November 2009 B&N had to employ a poison pill approach to stop his 20% purchase.
Now an unexpected player, the Borders book chain, has joined the chase, offering a merger/takeover. That is strange, since Borders is also financially insecure, with market capitalization of only $100M, vs. B&N’s $860M. Can a lean fish swallow a whale? Usually not, but Borders has a partner, hedge fund magnate, activist Bill Ackman, who has offered to finance the purchase at $16/share, a 20% premium, for $960M , Ackman owns 42% of Borders, and had already, in 2008, offered a reverse of this sale, Borders to be bought by B&N. Now he has more of an opportunity, since B&N declared itself to be for sale. Maybe there still a chance for the good old book industry, and the daily papers?
Bill Ackman of Pershing Square Capital Management is an old acquaintance of people of East Midtown. He bought $300M worth of ST/PCV bonds for $45M and tried to foreclose, in the hope of making an n easy fortune in turning the entire $3B property into a co-op. But the overseer, C. W. Capital sued , and NY Supreme Court Justice Richard Lowe stopped the action.
Why should this shrewd operator, with a quick profit motivation, make a major investment in what the market place claims to be a slowly drowning industry, called printed paper? We all know that the general newspapers are losing, the majors are cutting their paid reporting staffs. Now books are migrating to electronic storage media. Is this all worth while, as some environmentalists may claim, will this help save our trees and preserve oxygen supply, and stop land from eroding, and salvage the groundwater supply? Much as we may be for ecology and carbon control, the answer is negative. We want our children and heir children to be able to go to sleep hugging their little Goodnight Moon and The Little Train That Could books, not some electronic tablet with buttons (ah, you have not heard, the newest-readers can show color pictures!).
For background of the ups and downs in the book sales field: B&N, founded in the mid-1800s, was broke when college bookstore operator Leonard Riggio and partners bought it in 1971. Now it has 717 stores in 50 states, plus 616 college bookstores, and it publishes classics, both off-copyright as well as with copyright texts, purchased from other publishers.
Borders, also founded in 1971 by two brothers while studying at UMich in Ann Arbor, merged with Waldenbooks and others, today operating 466 stores, each offering regionally balanced book stock. It was bought and sold by Kmart, and is managed by hedge fund Vector Group as well as by Bill Ackman. If Ackman succeeds, we are sure to see a shrinkage in duplicating B&N and Borders bookstores, our neighborhood will be the less for it, but the book industry will survive. Give books.
Wally Dobelis and the staff of T&V wish our readers a wonderful Christmas, happy New Year, a healthy Kwanzaa and a fine belated Chanukah.
Our East Midtown has always been a book country, with a Barnes & Noble book emporium near by everywhere, Cooper Square to Murray Hill, the headquarters on 17th Street just east of Broadway and the superstore on corner 5th Avenue and 18th Street. If that were not enough, The Strand, reportedly the world’s largest antiquarian bookstore, the lone survivor from the famous America’s Book Row, is on the corner of Broadway and 12th Street.
The Book Row book world has been changing since the 1950s, first by real estate development on Fourth Ave south of 14th Street driving out the low profit antiquarian stores. The rise of B&N and subsequently Borders, with superstores offering comfortable reading areas, free author lectures, huge stock and good discounts drove out a lot of new book stores, only to be attacked by Internet book sales on the Amazon site, soon joined by B&N itself. The recession did not help, libraries became widely popular, carrying multiple copies of popular titles, particularly the crime writers
Now our book paradise is under a new threat, called e-books. Although the tablets are still under development, Amazon’s original Kindle is attracting fiction readers at $10 a volume, and the ever-ready-to-join B&N has added its e-reader, Nook, at competitive prices. Recently Apple’s iBook and bookstore jolted the fray, and now the Google steamroller has moved in, as of December 6 activating its retail store with its huge stock of some three million books, most copied from university libraries, particularly the five centuries of non-copyrighted titles, acquiesced to by the librarians in the interests of protecting knowledge from getting lost. Google’s books aim to be accessed through any web browser, and to connect to any device, a lot of them free of charge. What role the public libraries will play in this part- fee based and part-free environment is yet to be fully developed.
Barnes and Noble has been further bothered by costs, losing money in new ventures and store expansion. An activist investor, shopping mall billionaire Ronald Burkle tried a takeover, and in November 2009 B&N had to employ a poison pill approach to stop his 20% purchase.
Now an unexpected player, the Borders book chain, has joined the chase, offering a merger/takeover. That is strange, since Borders is also financially insecure, with market capitalization of only $100M, vs. B&N’s $860M. Can a lean fish swallow a whale? Usually not, but Borders has a partner, hedge fund magnate, activist Bill Ackman, who has offered to finance the purchase at $16/share, a 20% premium, for $960M , Ackman owns 42% of Borders, and had already, in 2008, offered a reverse of this sale, Borders to be bought by B&N. Now he has more of an opportunity, since B&N declared itself to be for sale. Maybe there still a chance for the good old book industry, and the daily papers?
Bill Ackman of Pershing Square Capital Management is an old acquaintance of people of East Midtown. He bought $300M worth of ST/PCV bonds for $45M and tried to foreclose, in the hope of making an n easy fortune in turning the entire $3B property into a co-op. But the overseer, C. W. Capital sued , and NY Supreme Court Justice Richard Lowe stopped the action.
Why should this shrewd operator, with a quick profit motivation, make a major investment in what the market place claims to be a slowly drowning industry, called printed paper? We all know that the general newspapers are losing, the majors are cutting their paid reporting staffs. Now books are migrating to electronic storage media. Is this all worth while, as some environmentalists may claim, will this help save our trees and preserve oxygen supply, and stop land from eroding, and salvage the groundwater supply? Much as we may be for ecology and carbon control, the answer is negative. We want our children and heir children to be able to go to sleep hugging their little Goodnight Moon and The Little Train That Could books, not some electronic tablet with buttons (ah, you have not heard, the newest-readers can show color pictures!).
For background of the ups and downs in the book sales field: B&N, founded in the mid-1800s, was broke when college bookstore operator Leonard Riggio and partners bought it in 1971. Now it has 717 stores in 50 states, plus 616 college bookstores, and it publishes classics, both off-copyright as well as with copyright texts, purchased from other publishers.
Borders, also founded in 1971 by two brothers while studying at UMich in Ann Arbor, merged with Waldenbooks and others, today operating 466 stores, each offering regionally balanced book stock. It was bought and sold by Kmart, and is managed by hedge fund Vector Group as well as by Bill Ackman. If Ackman succeeds, we are sure to see a shrinkage in duplicating B&N and Borders bookstores, our neighborhood will be the less for it, but the book industry will survive. Give books.
Wally Dobelis and the staff of T&V wish our readers a wonderful Christmas, happy New Year, a healthy Kwanzaa and a fine belated Chanukah.
Labels: Bill Ackman, Leonard Riggio
# posted by Wally Dobelis @ 10:25 AM 
