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August 22, 2006
Finding value in an old brand?
According to this morning's New York Times, Tower Records Will Auction Its Assets. The action raises two questions:
1) is this the death knell for brick-and-mortar music stories, and if so 2) what value do those assets really have. As the story says:
Phil Leigh, a senior analyst for Inside Digital Media Inc., said that the Tower brand had value and would find a buyer, but that its stores were not likely to survive this latest bankruptcy. The company emerged from another bankruptcy in 2004. “I think they’ll sell off the name and liquidate the inventory,” Mr. Leigh said.
Tower Records, however, said it had seen “substantial interest among potential buyers” and hoped to find a buyer willing to continue operating its stores. The company said it was actively negotiating with one potential buyer and had received another offer on the eve of its bankruptcy filing.
It is “absolutely our intention to keep the Tower brand alive,” a spokeswoman, Lisa Amore, said.
There are two intangible assets here that may be of value: location of the stores and the brand. Interest by other major retailers in the stores is one thing; interest in actually operating those locations as record stores is something very different. Likewise with the brand: it is one thing to buy the brand to sell records, it is something else to buy the brand to morph it (and the stores?) into a different product line.
It will be interesting to watch what happens.
Posted by Ken Jarboe at August 22, 2006 11:42 AM
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