by Alan Beatts
Yesterday I mentioned that Barnes and Noble announced that they were closing about a third of their stores over the next ten years and I speculated that it would neither take that long nor stop at a third. I also suggested that, if I were the founder of the company, Len Riggio, I'd spin off the Nook ebook reader section as a separate company and then dump the physical bookstore part of the business.
Well, seems like Mr. Riggio is ahead of me. I did a little bit of digging and found that the first part already happened.
It seems that, as part of the deal last year in which Microsoft invested a ton of money in the Nook side of B&N's business, a subsidiary of B&N was created which incorporates both the Nook and ebook part of the business as well as all the college bookstores. It's called Nook Media LLC and it's a subsidiary of B&N -- _not_ a separate company -- for now. The October press release announcing Nook Media said in part,
"As previously announced, there is no set timetable for Barnes & Noble's review of strategic options for its investment in NOOK Media LLC. There can be no assurance that the review will result in a strategic separation or the creation of a stand-alone public company. Barnes & Noble does not intend to comment further regarding the review unless and until a decision is made."
In other words, "We haven't decided. We might. And we're not going to talk about it anymore."
What is interesting me are the possible reasons to bundle the college stores up with the ebook business. Was it that Microsoft didn't want to have anything to do with investing in the regular physical stores? If so, why include the college stores at all? Or is it that Riggio thinks that the forecast for the college stores is better than for the "regular" stores?
That last might hold some water (as well as explaining why Microsoft would support it). College bookstores have a captive audience. If you remember being a student (or, gods help you, you're one now), I'm sure you still feel the outrage at paying a huge amount of money for a Xeroxed, looseleaf "syllabus" for some class that you had to take. A syllabus you could _only_ get at the campus bookstore. Based on what I hear from some of my younger friends, that still goes on.
Another nice thing about college stores is all the crap you can sell there -- sweat shirts, tote bags, t-shirts and, for all I know, g-strings all emblazoned with the school logo. The profits on that stuff are good and, once again, you've a captive market.
Still all very strange to me. Especially after the contortions that B&N when through just four years ago to get the College stores back under the corporate umbrella. But . . . wait . . . what if that was driven by the same concerns driving the recent separation? "Regular" stores are in trouble, college stores are doing OK, move college business back under the umbrella of the "core" B&N so things look better. But then -- "Regular" stores are doomed, Nook is good and attracts money, college stores are doing alright, separate the two and have one good company and one bad company.
Of course, all this could just be because Riggio got his start running a college bookstore at NYU. Maybe he just loves that business. Or maybe not.
Anyone want to buy B&N stock right now?
Didn't think so.