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Bankruptcy Jolts Indie Publishers
Rowman & Littlefield's distribution subsidiary, National Book Network, is one of two firms trying to take over Publishers Group West. NBN, the smaller of the bidders, is offering more money to Publishers Group's creditors.
(By Dennis Drenner For The Washington Post)
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Perseus's distribution unit brokered and sold a book on the Sept. 11 investigation and tends to lean toward serious books on public policy, political science and history and biographies. It also has as a client Civitas Books, an African American publisher.
Both Perseus and NBN have offered to pay a percentage of the money owed to PGW's clients. Both are working to convince publishers to support their bids as a way of persuading the bankruptcy court which company should get the firm. Going with the bigger firm would mean more influential representation for publishers, said David Steinberger, president of Perseus. Going smaller would allow for more personal service, said Jed Lyons, NBN's chief executive.
NBN hopes the deal boils down to money. It is offering 85 cents on the dollar to creditors, compared with Perseus's 70 cents.
To show its willingness to let publishers look for other options if they don't like NBN's services, the company has offered three-year contracts with publishers, compared with Perseus's four.
NBN's Lyons noted that Perseus has requested a $500,000 payment if the court doesn't choose its offer. This is not uncommon, according to industry analysts, who say bidding parties often ask for compensation because their interest boosts the value of the company on the block. NBN wouldn't request such a payment, Lyons said.
"The judge did say our offer is higher and better," Lyons said after a hearing earlier this week.
Steinberger said that Perseus, which would become the nation's largest independent book distributor if it wins the deal, has the relationships that enable its representatives to call at will on the biggest book buyers in the industry.
"You're entering a relationship with a partner who is going to help you get your books sold into bookstores," Steinberger said.
"They need to be knowledgeable and passionate about your books. And if you're entering into a long-term relationship, that's more important than if you get an extra 5, 10, 15 percent on the dollar."
A federal bankruptcy court has told the approximately 150 publishers that have filed claims on PGW assets that they are free to sign with either or both companies to show their support for the bidders' proposals.
The publishers have also asked the judge to let them break their contracts with the distributor if they don't like whichever acquires PGW.
