Last Maneuvering Before PGW Decision

by Jim Milliot, PW Daily -- Publishers Weekly, 2/14/2007

With a 5 p.m. deadline looming to get its final offer in to the bankruptcy court judge, NBN head Jed Lyons said he remains confident he will meet the deadline. Lyons said NBN has over 100 signed contracts and expects to receive more during the day. He declined to give the percentage of pre-petition PGW revenue the contracts comprise.

Yesterday, following a letter sent by Perseus CEO David Steinberger outlining his plans for PGW, Lyons sent his own letter to publishers about what he envisions for PGW if NBN is successful. Like Perseus, NBN plans to make job offers to most of the PGW sales and marketing staff. NBN will also keep a Bay Area presence and maintain a New York office. The company hopes to sign a lease with the appropriate landlord to keep the PGW inventory in its current distribution center in Indianapolis. (The center is not part of the assets being acquired by B&T; see story above).

Some of the PGW staff members took exception to the use of their names in the NBN letter, concerned that it represented an endorsement of the NBN offer, according to Avalon president and PGW founder Charlie Winton. PGW employees have not been allowed to talk to the press during the bankruptcy proceedings. Lyons said the letter was meant to show NBN’s commitment to PGW, and not as an endorsement. Winton, who expects to close on the sale of Avalon to Perseus by the end of the month, will serve as a consultant on distribution matters if Perseus’s offer is successful.

Avalon, along with several major PGW clients including Grove/Atlantic and New World Library, have sent their own letter to the court saying they will not sign with NBN, something that will make it impossible for NBN to get the better than 85% response rate attained by Perseus. With more than 100 contracts in hand and the support of the large houses, Steinberger said he is “confident we have the best solution for creditors, debtors and publishers.” Lyons said he has been buoyed by support from many smaller publishers who are worried about the attention they will receive from a combined Perseus/Constortium/PGW operation.

If NBN meets today’s deadline, the judge is due to rule on the offers tomorrow. It is possible that he could accept both the Perseus and NBN offers, a compromise that would give both sides something to cheer and boo.