All your customer are belong to us. You have no chance to survive, make your time.
Posted on 08/22/2006 7:08:05 PM PDT by SamAdams76
LOS ANGELES (Hollywood Reporter) - Tower Records filed for Chapter 11 bankruptcy protection for the second time in two years Monday, weeks after word surfaced that the iconic music retailer had been cut off by major suppliers for failing to pay its bills.
MTS Inc., the corporate parent of the 89-store chain based in West Sacramento, Calif., said in court papers that it aimed to keep Tower up and running as a "going concern" while a new owner is sought.
Many in the industry had feared that, given the severity of Tower's situation, a Chapter 7 liquidation could be in the offing. The possibility still exists that the company's assets could be sold off piecemeal if a buyer can't be located.
As the biggest and one of the last free-standing, deep-catalog music retailers -- with Virgin Entertainment's 20 stores as its closest competition -- Tower occupies an important position in the world of brick-and-mortar sales. Its flagship store is a landmark on Los Angeles' Sunset Strip, but it no longer draws crowds.
The company acknowledged in its filing, in U.S. Bankruptcy Court in Delaware, that its same-store sales declined 9% during the past year. It cited the industrywide slump and "intense competition" from legal and illegal downloading, as well as from "big-box" retailers, such as Best Buy and Wal-Mart, which sell music as a loss leader.
In 2004, the company underwent a prepackaged Chapter 11 filing in which bondholders assumed control of 85% of the debt-wracked firm. The family of founder Russ Solomon continues to hold 15% of MTS.
As a result of the current filing, the company will now receive $85 million in debtor-in-possession financing from its primary lender CIT Group.
Tower said it had negotiated delivery terms with its principal suppliers to assure a flow of fresh product into its stores. Recently installed CEO Joseph D'Amico said: "The trade has always supported Tower through difficult times, and we recognize that their support is imperative to the consummation of a transaction."
Subject to court approval, Tower will attempt to finalize a sale of the chain -- which hired Los Angeles-based Houlihan Lokey Howard & Zukin as its sales agent in March -- within 60 days.
The clock is ticking: The filing noted that Tower is scheduled to make the next payment on its revolving credit facility in mid-December. The document stated: "Without a restructuring or the sale of substantial assets, it is unlikely that the debtors will have sufficient liquidity to pay the portion of the CIT facility that becomes due on December 15."
The year's fourth quarter, in which record chains traditionally do the majority of their business, also is looming. D'Amico said, "Tower Records has conducted an extensive sales process, and this step will allow buyers to complete a sale in time for the holiday season while maximizing the value for stakeholders."
Sources said that a sale of the company to a consortium of unknown equity firms fell through in the days before Tower's current fiscal crisis became public knowledge.
"We're praying they'll reorganize successfully," one veteran music executive said. "We're praying they'll come back to life. Do I feel they're going to do it? Yes. Tower's enough of a brand, they can come back."
The executive added that the dissolution of Tower could have a dire impact on the public's perception of music retailing: "Can you imagine Tower Records with boards on the windows on Sunset Boulevard? It'd be horrifying."
"Everybody's rooting for them," a longtime sales executive said. "We all need as an industry for people like Tower to be around."
The list of potential buyers for Tower is a short one. Beyond equity firms, the likeliest purchaser might be Trans World Entertainment, a largely mall-based chain that operates more than 900 stores out of Albany, N.Y.
One observer believed that Trans World, which specializes in buying troubled chains' outlets at fire-sale prices, could swoop in "at the right price. . . . Trans World tends to wait until the right time to pick up these accounts. They're very smart and very astute people."
I remember Tower Records during their heyday of the early 1990s. Before Napster. Before iTunes. Before Amazon.com. Before you could buy CDs for somewhat reasonable prices at WalMart, Circuit City and Best Buy.
Boy, were they arrogant back then. Towering prices. Surly nose-ringed clerks who scowled at you if you didn't bring a CD to the checkout that they deemed "cool".
Well now they have their comeuppance. Nobody in their right mind is buying CDs there anymore.
Last year around Christmastime, I took a walk through their store in Burlington, MA. Despite a jammed mall nearby, this store was like a ghost town. By this time, CDs occupied a much smaller section of the store. Instead, they were trying to get into the DVD and book/magazine business to prop up their flagging revenues. Only their book section was crammed with Bush-hating books and other left-wing propaganda. I simply turned around and walked out of their store, vowing never to darken the doorway of that place again.
Can't wait until I see that place boarded up - or converted into a Wal-Mart.
I loved Tower. It had all kinds of CDs other stores didn't. So what if it charged a little more? It had what I wanted, and no one else did. Music is important enough to me that I'll pay one or two more dollars for something I want. I couldn't care less what some high school cashier thinks of my purchases.
P.S. The Burlington store always sucked. The Newbury St. store in Boston was like a treasure chest for me. Virgin wasn't nearly as good in terms of selection at first, but they're getting better. And ALL music stores have lefty-Bush-hating books.
We have a Dinosaur Media Death Watch Alert, or something to that affect. The same could be done with the old world of rip off music peddling. The days of paying upwards of $20 for a CD with one or two good songs are over, and the music stores that sold them are going with them.
Good riddance.
For that reason alone they are A1 in my book.
The 90s may or may not have been the heyday for the chain, but the heyday of the Tower Records on Sunset Blvd in L.A. (one of the original stores in the chain) was in the late 70s, early 80s when vinyl still ruled.
.....a place where I spent most of my youth :)
The store started to go downhill in the late 80s when they started selling everying from tee shirts to bongs and hired employees with serious 'tudes.
But then I discovered CD burners and an amazing source of material (oh well...it was the Minuteman Library Network) and the rest is history.
I couldn't agree more. As a former member of the music business, I honestly don't miss the left wing superiority of certain facets of the industry.
And crappy music from nowadays can't help.
Now I use iTunes a lot too.
Sure, but it's apples and oranges--a retail store vs. the new internet stores, which have multiple warehouses and such. I'm talking strictly about walk-in retail stores.
At one time TOWER was good because they had everything that was in print plus imports. They also published a superb monthly music magazine called 'Pulse', which was better than anything out there, when Rolling Stone went trendy and Spin was as always promoting mediocre heavy metal. For a short time Pulse spun out a separate classical music magazine, as good as its parent. I miss those two mags, as I see no comparable publications today that would point you to new, worthwhile music. One local Tower even gave away copies of the Sunday New York Times Review of Books with a week or two delay, when it was still decent and published literature reviews. And the purplehaired minimum wage punks behind the counter are the same in every record store you visit.
I didn't know Tower Records was still around. I never liked that place.
And I thought I was the only guy who hated Tower Records. My experiences were the same, and I agree with everything you said about them.
I haven't been to one in years. I got fed up with their punk-rock employees with bad attitudes, and decided to shop anywhere but Tower.
There is one a few miles from here. I think I'll drive by and gloat.
Does anyone remember Peaches records store? I spent many a day back in Fort Lauderdale there.
All your customer are belong to us. You have no chance to survive, make your time.
When buying new vinyl, Tower was the place -- best selection, best prices. But I often bought used vinyl for 99 cents a record (at various stores), often in pristine condition. The search was half the fun.
Yes. I lived just around the corner from one when I was a teenager. I bought my Elvis Costello and David Bowie stuff there . . . Unfortunately, that location became a Tower Records . . it's gone now . . . I did like Peaches, too. . . .
I haven't been in a music store (unless you count Best Buy which I don't) in a few years.
Amazon.com for me.
Tower was great when I still bought vinyl in the early-mid 80's.
The CD killed Tower for me, and later Amazon.
In 1975-76, I lived on the Sunset Strip and was a regular customer of Tower Records. Today, my favorite record store in the LA area is Canterbury Records in Pasadena, which carries CD's unavailable at other stores.
I used to go to a great used record store in Pasadena called Poo-Bahs; they specialized in rare jazz.
I worked at both The Wherehouse and Tower Records (SF bay area) for two years at each store (1987-1991). Tower had the better prices and better product knowledge, AND better customer service because the employees were very passionate about music. I rarely, if ever, saw employees making fun other customer’s music choices because the employees were so into music as a whole. Most Tower employees were truly experts with one genre or another. We even had a couple of middle-aged classical experts who ran the classical room. I have very fond memories of Tower and if it weren’t for iTunes (which I am now an addict of) I’d only be shopping at Tower.
It's not that music is worse, its that huge chunks of people don't go to stores to get music anymore. I am a huge music buff and used to buy about a CD a week in high school, but I haven't purchased a new CD in probably over a year, although I do purchase a lot of newer MP3s online.
Tower Records.... Hmmm, weren't they a database design outfit?
They never should have banked their future on Paris Hilton records.
The Tower in San Francisco near the Wharf was an excellent place to visit. The employees were super smart, helpful and usually asked the customer for recommendations. Now I record iTunes Radio with WireTap Pro for all my musical needs.
Dude you are right on and I told the chairman of the board the exact same thing. The clerks were nicotine steeped goths that had more peircings than an old womans beaded hand bag. I finally wrote an email to the chairman and told him that they will be bankrupt in a few years because there stores are not friendly places to go. That I had discressionary income but every time I walked up to the front doors 2 or 3 of their employees would be smoking like an exhaust pipe of a 63 buick.
I told him once I got into the store the clerks had some crass music playing beyond the audio level of a WHO concert. There was just no way you would want to stay in that store.
He wrote back a blah blah blah letter and I told him he wont be able to save a sinking ship.
And so we bid tower a long over due "piss off"
My buddies and I used to eat chili burgers and chili fries at Carney's (the caboose turned restaurant) and then head on over to Tower for an hour or so. .....probably close to a thousand times.
Then have a few beers and check out the rocker chicks at Gazzari's.
If they fold, the classical collection and accessability of CDs at both our local Barnes & Noble outlets will have to serve, and we still get our Sinister Cinema catalog...
Well put, and it matches my own Tower experience. I've never been "scowled at" either, and suspect some folks are just too defensive or embarassed by their own preferences. Tower employees aren't just punk music fans.
We didn't have Peaches in Houston, but my first college boyfriend was from Kansas, and he had a Peaches t-shirt that was probably 10 years old back in 1986.
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