Lanham Firm Loses Book Deal

The subsidiary of a Maryland-based company lost its bid to take over the nation's largest distributor of independent books yesterday when a federal bankruptcy court approved the sale of Publishers Group West to a New York firm.

Some 150 independent book publishers had filed a claim to recoup $25 million PGW owed them for books that it had marketed and sold for them last year. The payments were frozen at the end of December, when PGW's parent company filed for protection under Chapter 11 of the federal bankruptcy code.

The New York firm, Perseus Book Group, had offered to pay 70 cents of every dollar owed to creditors and to maintain the name, staff and operations of PGW so that distribution of its clients' books would not be disrupted.

The National Book Network, which is based in Lanham and operates the third-largest sales and book distribution operation for independent publishers, jumped into the fray last week, offering 85 cents on the dollar. On Thursday, it sweetened the deal by offering full value.

But the judge's decision appeared to have been guided by the fact that publishers representing 85 percent of PGW's client list had indicated in writing that they preferred the Perseus offer.

"In the long run, the thing that's really going to make a difference to publishers is how well their titles are handled in the distributor's presentation to book sellers and in the regular ongoing course of business," said Grady Hesters, a member of a committee of the 150 PGW publishers that hired lawyers to represent them. "I think that this will allow the PGW publishers to continue to be represented and served for the most part by PGW staff, who are already familiar with their products and can represent them well in the market."

NBN chief executive Jed Lyons said his company had improved its bid over the past week to also offer to maintain most of the PGW staff, and was disappointed that it did not win the judge's approval.

"We've been in business as a publisher and distributor for 35 years, and we remain one of the largest," he said. "We'll just continue providing the same high quality personalized service to our clients that we always have."

Perseus chief executive David Steinberger said that the decision showed that the independent publishing world is looking beyond tomorrow's sales to ensure solid financial footing.

"It's a real statement that for independent publishers trying to compete in today's world, the partnership they have with their distributor representing their books and authors is really vital to their success," said Steinberger. "That is really the mission of our organization . . . helping independent publishers succeed in a world that's increasingly dominated by giant conglomerates."

Steinberger said he expected the deal to be finalized in March.