Tower feeling a little empty
Co. falling under weight of unpaid bills
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Come Tuesday, it's quite possible that shelves at Tower's 89 stores will be devoid of new releases by Breaking Benjamin, Slayer and Nina Gordon. On the DVD side, Tower indicated it would pay COD "for new releases and catalog titles they feel they must have," according to Dave Borshell, Image Entertainment's chief operating officer.
News that Tower would not be able to pay its bills started as a rumor Tuesday, and come Thursday, when the National Assn. of Record Merchandisers confab was in full swing, it was the talk of the meeting.
Tower Records, which has 89 stores but isn't, per one major label exec, as important as it once was, has been for sale since 2003. After failing to seal several deals, Tower Records hired Joseph D'Amico 10 days ago as interim chief executive officer and assigned him the task of selling the company.
"We're very concerned about what's going to happen with them," another head of a video label said. "Everyone in town has them on credit hold."
Borshell said he expects Tower to continue withholding payments until it lines up a new buyer.
Tower owes Image money, but not nearly as much as Musicland did when it filed for bankruptcy in January. That default caused Image to take a $1.6 million writedown in its fourth fiscal quarter ended March 31. Ventura Entertainment was even harder hit by Musicland's bankruptcy -- the retailer owed it almost $6 million -- and ended up being acquired by First Look Studios.
Borshell expects Tower's woes to take its toll on independents but notes that Tower has much more support than Musicland did in its last days.
"People care about Tower," he said.
Indeed, Tower Records' 26-year-old Sunset Strip location was a hallowed ground throughout the 1970s and '80s due to its extensive on-hand catalog, discounted prices and in-store appearances from up-and-comers and established stars. Store was known for hiring only knowledgeable clerks. It was also where many music stars did their shopping.
Like many retailers, Tower has been hard hit by music downloading. And whereas other record store chains have altered their shops toward "lifestyle" merchandise, including clothing and accessories as well as music, Tower has stuck to music, video and books.
Russ Solomon started the company in Sacramento by selling records in his father's drug store and then opening a store in 1960. After opening in San Francisco in 1967, he started to envision supermarket-style record stores around the globe.
There is some urgency for Tower to find a buyer and create a financial plan before the fourth quarter arrives. If the company limps into October, it won't have the resources to keep the shelves full for the holiday rush, which could quickly spell its demise.
A NARM attendee told Daily Variety that talk at the confab concerned the likelihood of a Chapter 7 bankruptcy filing, which would force Tower to liquidate.
