A market crash of a different cause

[Zonker]

To have any hope of stemming the industry's secular decline, publishers must nurture the next generation of readers, and that means making comics accessible, readable and a good value proposition (better art and stories cannot do it alone - the overall product needs to be revamped, as well as the distribution scheme).

 

...

 

I have no problem with pamphlets co-existing with TPBs, but TPBs must, at some point, become the primary emphasis of the publishers - it makes sense from a value perspective to the customer, to a visibility/accessibility perspective for fresh readers, to a cost perspective for the publisher. I agree that pamphlets can continue to play a role, particularly in launching/test-marketing new titles and for lower print-run titles.

 

Gene

 

I'm in pretty much complete agreement with your comments above. What were we arguing about again?

 

We may still slightly differ on what exactly is meant by making TPBs the primary emphasis of the publishers. Comparing TPBs and monthlies, I'm thinking the end-state is a 60%/40% mix in terms of effort & emphasis, but I'm agnostic over whether that mix will be biased in favor of the TPB form (reprints + original graphic novels) or the monthly periodicals.

[FFB]

Here's an interesting PR that's on the newswire today. This means we're going to start seeing comics (not just TPBs) now in Barnes & Noble, Walgreen's, Target, Sav-On Drugs, 7-Eleven, Borders, CVS, Kroger, Waldenbooks, Sam Goody, Hastings, and other stores services by Source Interlink. This is the kind of increased availability that I was hoping we'd see again some day. This company is the largest direct-to-retail distributor in the country, and it supplies its magazines to every zip code in the US. I wonder if they'll work a deal to get the TPBs into some of these stores that don't already carry them?

 

--------------------------------------------------------

 

Source Interlink to Distribute Marvel Comics

Thursday March 25, 8:30 am ET

Company Expands Periodical Distribution Beyond Magazines with Leading Comic Book Publisher

 

 

BONITA SPRINGS, Fla.--(BUSINESS WIRE)--March 25, 2004--Source Interlink Companies (Nasdaq: SORC - News), the largest direct-to-retail magazine fulfillment distribution company and leading provider of magazine sales information and retail checkout management services, today announced it has signed an agreement with Marvel Comics, the number one publisher of comics in the United States and a part of Marvel Enterprises, Inc., to distribute comic titles to specialty markets across North America via Interlink.

Source Interlink will distribute comic titles including Ultimate Spider-Man, The Uncanny X-Men, The Incredible Hulk, Daredevil, Captain America, and others. Source Interlink is the nation's largest distributor to major bookstore chains and independent retailers, including Barnes & Noble, Borders, B. Dalton Booksellers and Waldenbooks, distributing more than 4,000 titles to approximately 8,000 retail stores throughout North America.

 

James Gillis, Source Interlink president and chief operating officer, said, "The distribution of comic book publishing provides us with an additional strong growth opportunity. This agreement reflects our commitment to expand our core specialty distribution market beyond magazine publications. Marvel serves as the leading comic book publisher, and we are excited to effectively broaden the reach of Marvel's popular characters and plot lines to the specialty market."

 

About Source Interlink Companies

 

Source Interlink Companies is a leading provider of fulfillment and marketing services to retail companies who collectively operate approximately 80,000 stores, most major magazine publishers and consumer product manufacturers of confections and general merchandise. Its business consists of three interrelated operating groups: Fulfillment, In-Store Services and Manufacturing.

 

Fulfillment manages the direct distribution of magazines to more than 5,300 retail outlets in the specialty retail market operated by 25 retail chains plus independent retailers. It assists these retailers with the selection, logistical procurement and fulfillment of approximately 4,000 monthly and 50 weekly magazine titles. The Fulfillment operating group is the largest U.S. importer of foreign magazine titles and a leading exporter of U.S. titles to the international market.

In-Store Services assists retailers in the mainstream retail market with the design, manufacture and implementation of their front-end merchandising programs. This group provides other value-added services to retailers, publishers and other vendors, including assistance with publisher rebate and other fee collection as well as access to real-time sales and marketing information on more than 10,000 magazine titles, enabling customers to make more informed decisions regarding product placement and distribution.

Manufacturing designs and manufactures wood displays and store fixtures for leading specialty retailers.

For more information, please visit the company's website, http://www.sourceinterlink.com/.

 

Some of the information in this release contains forward-looking statements that involve risks and uncertainties. The words "believe," "expect," "anticipate,' "estimate," "project," and similar expressions often characterize forward-looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. These statements are only predictions and you should not unduly rely on them. Our actual results will differ, perhaps materially, from those anticipated in these forward-looking statements as a result of a number of factors, including the risks and uncertainties faced by us including: (i) market acceptance of and continuing demand for our services; (ii) the impact of competitive services; (iii) the pricing and reimbursement policies of magazine publishers; (iv) our ability to obtain additional financing to support our operations; (v) changing market conditions and other risks detailed below;(vi) demand for magazines at the retailers we service; and (vii) our ability to access retailers' point-of-sales information needed to efficiently allocate distribution.

 

We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to predict accurately or over which we have no control. The factors listed above provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you make an investment decision relating to our common stock, you should be aware that the occurrence of the events described in these risk factors could have a material adverse effect on our business, operating results and financial condition.

 

Any forward-looking statement speaks only as of the date on which that statement is made. Unless required by U.S. federal securities laws, we will not update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

 

Marvel, Ultimate Spider-Man, The Uncanny X-Men, The Incredible Hulk, Daredevil, Captain America, and the distinctive likenesses thereof are trademarks of Marvel Characters, Inc., and are used with permission. Copyright © 2004 Marvel Characters, Inc. All rights reserved. www.marvel.com.

[PedigreeMan]

Right now, the most likely scenario for this is if one of the Big Two were to stop publishing, either due to a bankruptcy (re: Marvel) or parental politics (re: DC).

 

Was this an example, or are you actually suggesting that Marvel is in danger of bankruptcy?

 

Just an example. Marvel appears to be pretty stable in the short run.

 

Long-term, though? Being a publicly traded company in a niche market where the fan base has plateued is probably not a CEO's dream position. In ten years when the cyclical Hollywood interest has reached a valley and taken its millions of dollars with it, Marvel may be hard-pressed to find something new to replace that lost revenue. This is when idiotic ideas like buying a Toy Biz or Panini or trying to run your own distributor (Heroes World, anyone?) start popping up. From there it's a short hop to bankruptcy.

 

Now, of course because Marvel has such a large stash of IP, the likelihood of falling into Chapter 7 (liquidation) is remote. But stranger things have happened.

 

In all reality, though, I would be more worried about the long-term possibility of DC biting the bullet. If things continue to go downhill at Time Warner, I can definitely foresee someone cutting DC off at the knees to save a few million. Right now, Levitz is playing a savvy political game and keeping DC flying under the radar ... but once he retires, who knows who his replacement will be? A maverick like Bill Jemas taking over the top spot would be cause for great concern.

 

Alan

[hobbes]

I'll say up front that I have no idea what Marvel or DC plan as far as monthly comics vs tpbs.

 

I can, however, speak from a personal perspective. The only thing that catches my son's eye about comics are the covers. Hand him a tpb though and he is off in superhero land for awhile. I have no explanation as to why he prefers tpbs over comics. I just know that when we go to the store, he heads for trades and not standard monthly comics.

[PedigreeMan]

I can, however, speak from a personal perspective. The only thing that catches my son's eye about comics are the covers. Hand him a tpb though and he is off in superhero land for awhile. I have no explanation as to why he prefers tpbs over comics. I just know that when we go to the store, he heads for trades and not standard monthly comics.

 

Lack of obsessive compulsiveness?

[hobbes]

I can, however, speak from a personal perspective. The only thing that catches my son's eye about comics are the covers. Hand him a tpb though and he is off in superhero land for awhile. I have no explanation as to why he prefers tpbs over comics. I just know that when we go to the store, he heads for trades and not standard monthly comics.

 

Lack of obsessive compulsiveness?

 

I hope so! However, he is pretty freaking obsessed with LaCrosse right now so the verdict is still out on whether or not that is one of his personality traits.