Monday, August 16, 2010


By day I’m a financial journalist. I cover the commercial real estate market so I have read about the Barnes & Noble drama, not reported on it. Most of what I have read has been questionable, if not unlikely. This has resulted in a lot more stress to the publishing world than is necessary. So, with this week’s blog, I’m changing gears a bit. Hopefully this will help you understand better what’s going on.

For the past two years, things at B&N have been tough and the company’s stock price has gotten pretty low. The Riggio family owns about a third of the company’s stock. A billionaire named Ron Burkle owns 19%. Recently the Riggios and the board of the company announced that they were considering selling it or taking it private. Burkle tried to buy more of the stock but was blocked. He sued and the Riggios set up a poison pill. A poison pill is business speak for making it really, really financially unappealing for any investor to take over the company.

There are a few things that don't add up to me about this. The first is that Burkle is suggesting that Barnes & Noble is mismanaged. It seems fair to say they expanded too aggressively and could close some of their stores. But they've got 720. How did Barnes & Noble get so dominant without good leadership? I also find it a little silly that the mainstream media keeps comparing Barnes & Noble to Amazon. Sure Amazon sells more books than Barnes & Noble. But they sell other things, too, like garden hoses and flip-flops. I've never seen anything like that at Barnes & Noble. This makes the companies incomparable.

Some in the media have decided that this is death knell for all bookstores. I’m pretty sure it’s not. I think that bookstores are in a similar situation to the company that I work for. Our business used to be print only. Journalists tended to specialize in print, radio or television. Today journalists have to excel at all three. This evolution is hard and daunting. But we’ll adapt. So will Barnes & Noble. And in the meantime, we can all follow a story that seems like the bad part of a modern-day fairy tale...poison pills, hostile takeovers and messy lawsuits.

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