Music GroupsTower CEO Emails A Silver Lining
According to Tower CEO Joe D'Amico, its recent Chapter 11 filing is "actually very good news," and in an email to customers he goes on to explain why.
To Coolfer, there are reasons why it's not good news, so let me take off the gloves and explain. Viewed in context of the seemingly unstoppable forces of market change, a $75 million line of financing only serves to extend Tower's inevitable demise. The restructurng of Tower's debt destroys wealth and jeopardizies the financial health of its vendors.
Can Tower's creditors find a silver lining? After Tower is purchased -- presumably by a far more financially sound company -- at least vendors can rest assured that they probably won't have to deal with payment problems for the third time this decade. That's a postive, though not much of one. What Tower's vendors can look foward to is the continued decline of large music specialists and a transfer of market share to online stores and hits-driven mass merchants. They can enjoy Tower's market share as long as they understand where their future billing will come from.
Is the company moving toward the future? Tower's new digital store is an embarassment, a weak storefront in a crowded market that offers consumers many far better options.
If music will be its strong suit, the chain can go under now or it can go under later -- take your pick. The market will take time to absorb Tower's lost sales, but it can happen over the long term. Might as well start now. To remain viable, the chain needs to be completely reorganized and its emphasis on music needs to be lessened. That entails a long and risky restructuring and re-branding effort.
To read the entire email that was sent to customers, click for more.
