Publishers Root for Borders, Distributors Reassure

Rumors and also sobering facts have been flying about Borders for over a year, so it isn’t exactly a surprise that FT.com came out with an article saying that the retail chain isn’t paying its smaller (book) publishers. Still, it isn’t exactly a joy to read. Phrases like “bleeding cash”, “growing arrears”, and “legal action” are never fun to read, and in particular not when those phrases refer to a retail chain so important to magazine publishers.

Borders Group Inc. is the second largest retail source for many specialty magazine publishers, and first for some. Their retail approach for years has been characterized by a carefulness about inventory, a management of allotments to avoid excessive returns, a lively awareness of the value of magazines, an interest in vertical niches, a seriousness about matching vertical content to targeted stores, an open, cordial relationship with publisher suppliers…all good stuff, all things we’ve grown to depend on. The kinds of traits, in fact, that you look for in a retail partner. I can hardly think of a magazine publisher out there that won’t be rooting for BGI in all of this.

In some cases, in fact, it will be an unmitigated disaster if Borders goes down. If this chain tanks, they are certain to take more than one small publisher with them—not because of outstanding payables, but because of the loss of such an important retail sales outlet. To these publishers, the fact that the distributors as a group seem to be standing so solidly behind this chain is a source of relief and hope.

According to Border’ magazine distributor, Borders maintains a strong and positive financial standing, despite the intense financial scrutiny they have been under for over a year. Holiday earnings were reported as down 13.7%, a result that Borders’ Ron Marshall called ‘disappointing.’

However, the chain’s strategic management team does have an approach in place geared to weathering the economic downturn. An example cited was Borders’ e-bookstore, which they are working on now and is expected to be in place by June. Also mentioned was plans for an e-reader that is to feature the e-store when it launches.

Both initiatives seem…late (if that’s the word I’m searching for)…to anyone who has followed what is going on in this industry or, in fact, probably to anyone. Still, they do show a commitment to their business, and the fact that they are going ahead with these plans must be seen as encouraging.

And anyway, few publishers are likely to cut such an important retailer off while there is still hope for a turnaround.

But many will proceed with caution.