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Posts Tagged ‘CDS’

Today in AMS: WSJ Picks up the Story

When it comes to the Wall Street Journal, I’ve learned not to ask the obligatory “what took so long?” question because they seem to go through about triple the research and vetting standards that most of the major newspapers do in order to file stories. And by delaying on the AMS bankruptcy debacle, they give the story – and the perilous situation for Publishers Group West publishers – new life. Most of Jeff Trachtenberg‘s piece focuses on Perseus‘s plan to pay PGW’s publisher clients 70 cents on the dollar for their claims in exchange for dropping their claims against AMS and sign an extended book-distribution agreement with Perseus. Not only has Avalon, which announced its move to Perseus earlier this month, signed on, but so now has Grove/Atlantic.

“It’s a natural extension of what we’ve been doing the last few years,” said David Steinberger, Perseus’s chief executive. Steinberger said it will cost an estimated $20 million to pay PGW clients for their claims. That money could be paid out in a matter of weeks, if the court approves the deal. But Soft Skull‘s Richard Nash is one publisher who is worried about his prospects for survival in the wake of bankruptcy. That’s because Soft Skull is owed $110,000 by PGW and anticipates big bills as booksellers send back unsold copies from the holiday season. Soft Skull is debited for the wholesale price of each returned book and so far, those returns total $20,000 this month. Nash is also $250,000 in debt, including $40,000 from family members that he considers a personal loan.

If Perseus is successful, it will have an estimated 250 independent book-publishing distribution clients. And that’s where it becomes tricky. Because if every one of PGW’s clients signs on with Perseus, it gives the distribution company a tremendous amount of power. Aside from their in-house imprints, they are also responsible for distributing books under the CDS and Consortium arms, totaling approximately 120 separate publishers. Add in PGW’s approximately 150 publishers and suddenly, the vast majority of independent publishers owe their abilities to get their books into bookstores to a single company. And if the AMS mess has proved one thing, it’s that the perceived autonomy PGW had ended up amounting to very little. Which is why, as Radio Free PGW points out, it’s a good idea to look at those prospective contracts very, very closely.

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Today in AMS: PGW Conference Calls, Bankruptcy Court Hearings

Publishers Lunch reports that Publishers Group West clients were explained in a conference call yesterday he details of the offer being formulated by Perseus Books Group, which has already secured distribution rights for Avalon Publishing Group and its imprints. The rough plan is for Perseus to pay 70 cents on the dollar of what clients are owed up to the date of the bankruptcy filing. PGW would continue operating as is for the next six months before clients accepting the Perseus offer would move over to their distribution facility. Though other offers could still be tendered, 70 cents on the dollar is a lot higher than what PGW clients were expecting.

So on the face of it, this looks like Perseus could well be PGW’s savior – or is it? Never mind that already the company is responsible for CDS and Consortium clients, and adding the full roster of PGW clients would give it a gigantic stake in independent publishing, with the ramifications and consequences still very much up in the air. Never mind that there’s no word on which of PGW’s clients were included in the conference call, as grumblings have reached GalleyCat‘s ears of “musical chairs”-like prioritization, potentially leaving some struggling independent publishers out in the cold, with little recourse but to shut up shop. In other words, the news sounds good – but optimism is far from guaranteed.

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Independent Publishers Get Hurt by AMS Chapter 11 Filing

Declaring bankruptcy isn’t exactly the best way to begin the new year, but that’s exactly what has happened as Advanced Marketing Services filed Chapter 11 papers on December 29. The full text filing is available via PW Daily, and looking through the list of its top creditors – scrolling past the instantly eye-popping numbers of $43 million owed to Random House and $26 million to Simon & Schuster, the real story begins: the plight of the independent publishers.

That’s because many of them – over 150, in fact – use Publishers Group West as their distributor. PGW, over 30 years old now, had been an independent distribution entity until AMS bought them in 2002. And even though PGW had been considered an autonomous unit within AMS, that only goes so far, especially when money owing is concerned. Because even though the volumes at play do not compare to what’s owed to the top corporate publishing companies, it’s all about the percentage of revenues – so companies like Avalon ($2.3 million), Cooks Illustrated ($1.5 million), Good Books ($970,000), McSweeney’s, North Atlantic Books, Milkweed and Soft Skull, to name a select few of PGW’s clients, are about to take a severe hit, what with expected revenues for the last three months – key months for all publishers, small or otherwise – suddenly disappearing.

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