Tuesday, September 21, 2010

The Never-Ending Battle Continues

As I mentioned last month, there's a battle going on for control of Barnes & Noble (BKS). Leonard Riggio, chairman and largest stockholder of the company, wants to retain control; Ron Burkle, billionaire and founder of the Yucaipa Companies, llc, wants to seize it. Until recently, that was all there was to say about it.

Last week, however, Institutional Shareholder Services, a major proxy advisory company to stock investors, endorsed Burkle's plan to seat three of his own nominees (including himself) on the company's nine-member Board of Directors, as well as rewrite Barnes & Noble's shareholder rights (or "poison pill") plan, a measure designed to prevent hostile takeovers. Apparently, Burkle believes that BKS is "significantly undervalued" and a change of management is necessary to restore the company to fiscal health. Among his chief complaints is that Barnes & Noble waited too long to introduce the Nook, thereby handicapping the bookseller in the digital media/e-book market.

Not everyone agrees with ISS, however: three major advisory services (Glass Lewis & Co., Egan-Jones Proxy Services, and Proxy Governance Inc.) are on Riggio's side, a position somewhat strengthened by the fact that a Delaware judge ruled against Burkle's legal assault on BKS' poison pill defense. Shareholders are scheduled to vote on the proposals at the end of the month.

What does this mean for the industry and for you as authors, readers, and consumers?

Again, I doubt this battle will much affect Barnes & Noble's bottom line in the short term. An ultimate victory by Team Riggio will probably result in little substantive change for the company; a victory by Team Burkle could be game-changing, as his vocal desire to move BKS further into digital media and Yucaipa's successful history of leveraged buyouts could indicate a plan to convert Barnes & Noble into a more direct competitor with Amazon (more emphasis on e-books and related content, reduction of physical title stock, more money allocated to .com business, and so on). The times, they are a-changin', mes auteurs.

To be clear: this is all speculation on my part, and I don't know what Burkle is planning to do any more than any other moderately interested third party; I only know what's being reported in the news. I also have no real preference regarding control of the company; it's all the same to me whether it's run by a rich guy from New York or a rich guy from Los Angeles. I am, however, intrigued by the repercussions of either's victory, and I'm curious to see where this will take Barnes & Noble over the next five years.

What about you, gentle readers?


  1. Barnes and Noble has fought the Brick/Mortar war well and is just about to land the finishing stroke on Borders. ...just in time for Brick/Mortar relevance to diminish beyond the level required for a chain like B&N to support itself. Return to the individual independent bookstore, the library, or the online mega giant like Amazon.

    To this point, I haven't heard anything one way or another about Burkle other than "he's bad." If he's bad because he's an outside or he's bad because he thinks digital is the future, I will have to disagree. If he's just there to feast on the carcass while the heart is still beating, well then I better understand all the vitriol.

    He's right, though. The nook should have been to market sooner. It was, if it had been delivered to full specification (which it wasn't), better than the first two generations of kindles AND had the benefit of working the the B/M stores that Amazon lacks. It should be the device warring with the iPad. Instead it shows up like a Green Party candidate, always there but always ignored unless the gets bored with just the two mainstream candidates.

    If Barnes & Noble doesn't better position itself, it'll find itself the next Borders before they know it.

  2. I don't know how other writer's feel, but the type of climate surrounding the entirety of the publishing world right now, makes me want to board up, hunker down, and wait until the storm stops. Dorchester rolling over to e-only-leaving their author's who knows where, e-rights kafuffle in general, author rights re backlists, hostile take-overs - yech. I think that I've picked the worst time in publishings history to try to get noticed. The industry is too self-centred right now and it shows in what's being asked for by agents and published by houses. I am longing for a kinder, gentler time (don't worry, I'm not holding my breath).

  3. Looking at this from an interested bystander point of view, it seems to me if that B&N wants to survive and not become irrelevant like the newspaper industry, then this takeover attempt sounds like a very good thing.

    Today's world you have to change to stay relevant. No change, no relevancy. Just ask Border's or better yet, visit one.

  4. More on your dream guy Ronnie Burkle. Burkles legacy includes building more homes that turned out to be LEMONS than any other homebuilder in history. Just Google KB Home Sucks. Please post your complaints with this Burkle – who thought he was a homebuilder, just there to bilk Fanny and Freddy out of their mortgages along with, countrywide (aka kb home countrywide mortgage) , to the FTC Federal Trade Commission. The article sounds like another press release by KB Home. Enough with KB Home lies misleading the public and the government guess no one wants to do the sting on KB Homes deceptive practices not even the media since KB’s Board runs them too. KB Home ignores customer’s complaints and does not repair in a timely manner in TOTAL violation the 1979 FTC Consent order. What do you call timely? Still waiting after 20 months for KB Home to repair major defects? Where is the responsibility of KB Homes board including Stephen Bollenbach and Ron Burkle who are trying to control Barnes and Noble - Shareholders please say no to these 2 KB Home directors, it won't be beneficial to elect them to the board of B&N. http://www.akbhomesucks.com