12/29/06

Deseret Book Acquires Seagull & Covenant

Just in case you haven't heard yet, Deseret Book acquired Seagull (discount retailer) and Covenant (publisher). They made the announcement this morning.

This was a surprise. I knew they were still "talking," but never in my wildest dreams did I think it would go this way. Well, maybe in my very wildest dreams, but Mr. Kofford has not made it a secret that he enjoys being a competitive pain in DBs side--and so I repeat, this was a surprise.

So now what?

First, I want to say that this is NOT a case of big, bad Deseret Book picking on poor, sweet little Covenant/Seagull. Lew Kofford has enough business savvy that no one is going to walk all over him. This is a wise business move on the part of DB and Kofford seems happy with it. The good news is that DB intends to keep the companies separate and to continue to have Covenant and Seagull function as they have been. That is a better situation than gobbling them up and merging.

But that's the end of the good news. This is a blow to smaller publishers and independent bookstores who are already struggling to compete in a market dominated by a few giants. I wish I could cry "No fair" and accuse them of doing something bad and wrong, but I can't. This is the way business works these days. Wal-Mart does it. Colgate does it. The big NY based publishing conglomerates do it. They purchase smaller houses but let them continue to run themselves.

The fact is, in business, you swim with the big guys or you sink and get eaten. Sometimes the big guy will let you ride on his back rather than eat you up. From a small publisher's point of view, both getting eaten (fast death) or forced to ride the big guy's back are both better options than getting kicked out of the pond and flopping on the banks for awhile, gasping for air, then dying a long, slow torturous death.

And I can't say that if DB approached me tomorrow and made me an offer that I wouldn't sell out. I'd have to think a good long time, but I really don't know what I'd do.

I know many of you want to know how this will effect you--your chances of getting published. For now, it will remain status quo. There will still be two houses/imprints (more actually, because DB has several imprints). They will each specialize in what they are currently specializing in. You will continue to submit to both houses, as you always have and for the same reasons as before. And then we just wait and see.

6 comments:

Jeff Savage said...

As always, LDSP, you are right on track. I especially liked your analogy about riding or being eaten.

We can complain about it all we want or we can face it and move forward. I believe (hope?) that this big new fish will continue to recognize that you still need little fish to keep the pond clean and healthy.

Keep up the good work.

Andrew Hall said...

Thanks for your always interesting comments.
I have a question about the smaller Mormon presses. I believe in years past some of the books Cedar Fort published were "author assisted", that is the author paid for some of the costs of publication. Do you know if Cedar Fort still does that? And do any of the others--Granite, Spring Creek, etc, do it?
Thanks

Anonymous said...

Granite has begun to do it, but to the best of my knowledge, Spring Creek does not.

Anonymous said...

Yes, Cedar Fort does author subsidized publishing, but only on the authors first book. If they publish a second, third and so on book the author doesn't pay. But even though the author pay a substantial amount toward the publishing, Cedar still keeps a right of first refusal in the contract. However, they don't require payment on all their books, those they really feel will do well don't require a downpayment.
I understand Granite does subsidy as well, but does not have a ROFR clause in it. I think that's more fair--but i guess it's up to the author.

Kent Larsen said...

You wrote:
First, I want to say that this is NOT a case of big, bad Deseret Book picking on poor, sweet little Covenant/Seagull. Lew Kofford has enough business savvy that no one is going to walk all over him. This is a wise business move on the part of DB and Kofford seems happy with it. The good news is that DB intends to keep the companies separate and to continue to have Covenant and Seagull function as they have been. That is a better situation than gobbling them up and merging.

Really?

I think Kofford SAYS he is happy with it, because it is done, and because he has a way to sell off his business and retire.

Look at the chain of events, and it really looks like Kofford may not have had much choice.

* Over the past few years, Kofford says, he has been looking for an "exit strategy" -- a way of getting out of the business and retiring with the profits he has earned over the years.

* Last summer Deseret Book suddenly decides they don't like how Seagull markets their books and says they will pull their books from Seagull stores. This is a severe blow to Seagull, one that could potentially put it out of business. If nothing else, it makes the sale value of Seagull significantly less than what it was before.

* Seagull begins to negotiate with Deseret Book and wins a reprieve of a month.

* Nothing more is heard of the situation until the sale is announced yesterday. But Kofford's public comments say that the two sides became more and more impressed with each other until an agreement was reached.

I don't pretend to know what Deseret Book's motivations were, or the details of what happened. But the sequence of events makes it look like Deseret Book manipulated Kofford into selling, perhaps at a lower value than he might have received, if DB hadn't announced it was pulling its books from Seagull.

Perhaps this is just the way it looks, and not the substance of what happened.

But even if this isn't true, I think the acquisition has significant problems. Look at the posts on Motley Vision on this issue. I think you'll find there is a lot here to be disturbed about.

You can also listen to my interview on this acquisition and the history of the LDS publishing industry on Mormon Stories, where the suggestion was made that there needs to be an independent effort to organize the LDS market and grow it beyond what Deseret Book controls.

LDS Publisher said...

I agree, this situation has some real potential to negatively impact the industry. But DB has done nothing wrong. They do not prevent anyone from competing with them. They just have such a long-term market presence and buyer recognition that it is very difficult to compete with them.

And yes, there are already some independent efforts to organize and grow the LDS market beyond what DB controls. But that takes time, energy and money. If you have some investors, e-mail me privately and I can hook them up with a company that I think will do wonders for the industry if it can grow a little faster.

Where we disagree is Kofford being forced into selling at a reduced price. Everyone I've talked to is scratching their heads wondering why he sold to DB instead of putting it on the market and taking bids from independent sources. Several of us think he could have found several interested buyers. However, we don't know for sure. Perhaps you're correct.