This is an interesting business study/media relations case study because of the dynamics of the situation, but Deseret Book has acquired Seagull Book and Covenant Commmunications. Acquired. This isn’t a merger.
What makes it so interesting is that just a few months ago, Deseret Book Publishing came out and said it would no longer sell its books to Seagull Book because it didn’t like the way merchandise was handled/marketed in Seagull Book stores. Deseret Book was very careful to make sure that during the “you can’t sell our stuff” phase, CEO Sheri Dew was never in the news. It was always Jeff Simpson. Smart decision.
This was a wise media relations decision on the part of Deseret Book Publishing because of Sheri Dew’s former role within the LDS Church. Deseret Book/Deseret Book Publishing are part of a separate business, but the LDS Church does own the businesses, and this made the decision look like it had ties to the church. (Technically speaking, this has nothing to do with the church because these companies operate individually). But the perception was there, and I think this was part of the reason the “you can’t sell our stuff” announcement had so much backlash within the community. The very nature of Deseret Book’s role in the community and its ties to the LDS church put it in a rock and hard spot with this announcement because they are a business, and they want to be competitive, but the perception exists that the company is tied to a non-profit religion.
Fast forward to Today
Deseret Book acquires Seagull Book, and guess who is now in the news? Sheri Dew. What happened to Jeff Simpson? Again, Deseret Book is putting the right person in the story at the right time. Congrats to all involved on both sides. It sounds like each of the companies will operate individually, and I think this is another wise decision because it leaves competition in place. I’d like to hear Chris Knudsen’s thoughts on this from a business standpoint.
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I’d like to examine the net present value of cash flows before the acquisition related to future cash flow of the…wait. That sounds really boring. Sorry.
Looks like a deal to me. I’m not sure why they didn’t do this a long time ago. I’m also not sure how I feel about them keeping separate brands. Personally, I would dump the Seagull brand and show off my monopoly in the LDS books and music space - jack prices up by 20%. But hey, that’s just me.
Chris, isn’t this rather short term thinking? Seems to me that keeping the two separate brands is a smart move (of course, I’m not sure that DB will actually keep them separate in the long term…), as Sheri Dew suggests, along the lines of many different retailers (she mentions Nordstrom specifically). DB reaches two major segments of the LDS retail market this way.
But then, IMO, the acquisition itself is rather short term thinking. Russell, won’t this cause new public relations problems for DB? From my read on attending 10+ years of LDSBA conventions, most independent booksellers and publishers are already quite suspicious of DB — this gives them such a clear domination of the market that they aren’t likely to be very happy. Other LDS publishers are likewise suspicious of DB. But no one feels at ease to say much because they simply have to sell to DB, and because DB is owned by the Church.
Now this move has the potential to get customers upset, as DB takes advantage of the fact that it owns both chains (and, IMO, it is inevitable that they do so, possibly without realizing the damage they are doing to their reputation).
It kind of reminds me of the annoyance and anger many computer users feel at Microsoft. Yes they keep buying Microsoft products, but there is a significant frustration with the computer giant, because of how often they feel forced to use MS products.
Won’t consumers of LDS books become increasingly frustrated with DB, as their choices are limited through this acquisition?
Two separate brands don’t matter when everyone knows its the same company. Also, this isn’t a one product company that has to continually update its technology like microsoft - its a book store. You can’t really draw many comparisons between the two. Furthermore, its not a real monopoly, I can buy LDS products from many other places (wal-mart, Amazon, ebay, etc).
In the long run this merger will mean nothing to the customer.
Huh? Everyone knows about a lot of these kind of separate branding situations. I don’t think that they don’t matter — people shop at particular retail stores because of their perception of the store, not because of who they know owns it or doesn’t own it.
Perhaps you can’t draw too many comparisons between Microsoft and Deseret Book (which is, BTW, more than just a chain of bookstores — it is also a publishing company, which is perhaps somewhat closer to Microsoft). My point is not that the situations are identical, just that the public perceptions of the companies are becoming similar. [Both large companies dominating thier industries, both taking actions that alienate segments of their customers, competitors and partners, both taking actions seen as anti-competitive).
I think you might enjoy a more indepth analysis of this situation. I’ve given it a good look on Motley Vision and plan on posting more.
And yesterday I completed a two-hour long interview on the LDS industry that can be found at Mormon Stories.
Yes you can buy some LDS products from Amazon.com, walmart and other places. But Deseret Book (at least) specifically keeps some of their products from these markets (sounds like Microsoft, which keeps those who don’t use windows from using some of their products, such as Microsoft adCenter). These non-LDS stores are also not organized so that LDS products can be found easily. And the wide perception in LDS books is that these stores either don’t have LDS products, or put them alongside other, anti-mormon products. As a result, there is a significant breach between the LDS market and the rest of the book market in the US.
Technically, you are right. DB is not a legal monopoly. But if it walks like a duck, looks like a duck and quacks like a duck…
If its not a monopoly, it sure feels like one.
Seagull Book and Covenant Communications are also separate businesses.
DB/DBP are both owned by Deseret Management Corporation?
SB/CC are both owned by the same people?
Did I get this all correct?
Also, Sheri Dew claims that the companies will run as separate businesses, which I could see happening. But, I could also see some changes made.
It wouldn\’t suprise me to see things pan out more like a Banana Republic/Old Navy type of situation. They are owned by the same company, but they focus on selling to different markets. BR is more high end, and ON is more budget conscious.
Deseret Book stores and Deseret Book publishing are both part of the same company. Supposedly there is a “wall” between the two companies, but in practice it doesn’t seem to be much of a separation at all.
Seagull Book and Covenant Communications were both (before this acquisition) owned by V. Lewis Kofford. Again they were supposedly separate companies, but in practice they certainly cooperated.
Smaller LDS publishers have long noted that when it comes to the Christmas season, for example, Deseret Book stores tend to promote Deseret Book titles heavily and Seagull Book stores have promoted Covenant Book titles over others.
If the companies were truly separate, would there be such bias?
I too can see the two store chains run as separately branded stores, like Banana Republic/Old Navy. There is a certain marketing logic to this.
But they could also end up like KFC/Taco Bell, where many locations share both brands, but do so in a single building and sharing staff. I’m not sure of all the logistics of how that might work (and I don’t expect to see shared locations any time soon), but in some locations, where the market isn’t big enough to suit DB, it might be done to save costs. Of course, they would then have to define which titles should be discounted (and therefore sold by Seagull) and which should not.
It is also possible that 3 or 5 years or more from now, DB will decide that maintaining two different brands costs too much money and causes too many management difficulties, and eliminate one of the brands.
Regardless, as I’ve tried to cover at Motley Vision and in the podcast interview I gave at Mormon Stories I can’t see how this is a good thing for anyone in the LDS market, except perhaps for Deseret Book itself and for Lew Kofford.
RUSS:
I know this comment is ancient in connection with when your original post was written, but the “real” story behind what happened between Segull Book & Tape and Deseret Book is a LOT more convoluted and intriguing. I know because we represented Seagull Book & Tape as its Crisis Communications consultants in this entire matter. (See http://www.newswiretoday.com/news/6949/ as an example.)
I’d be happy to share the “real” story about what happened (at least what I can) now that it’s a year later.
Let me know if you’re interested.
David
c/o Politis Communications
“Maximizing corporate value
thru strategic communications”
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