PW reports on today’s book distribution maneuvers. Perseus Book Group, another big book distributer, has announced a plan to buy PGW client Avalon, and my be working with PGW to assume distribution for more of their clients.
“We’re trying to come up with a solution that will satisfy everyone’s interest,” Steinberger said about the PGW proposal. “Our goal is to move quickly, since circumstances require it,” he added. Steinberger had no comment on reports that Perseus is planning to offer to pay publishers up to 75 cents for every dollar owed PGW clients on the AMS bankruptcy in exchange for a multi-year contract. “We are looking for creative solutions,” he said.
The biggest stumbling block Perseus could face is the status of the PGW contracts. Although most distribution contracts provide an out for publishers if the distributor fails to make necessary payments, in the case of bankruptcy, those contracts are considered assets and any change in them would require court approval. Although the details of the Perseus offer are vague, the pending deal appears to be being made directly with the PGW clients and is not an offer to acquire PGW. If the court allowed the publishers to accept the Perseus offer, the value of PGW to AMS’s creditors would plummet. The judge may find that acceptable, since it would provide immediate help to the publishers, while lowering a liability, although, without a sale, it would give less money for the creditors to divide up.
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