Class Action Suit Against GC
(Port Washington, NY - July 11, 2007) Believing $63 per share is not enough, Guitar Center shareholders filed a class action lawsuit against the company on July 10. The goal of the suit is for shareholders to get a new and/or improved offer. GC announced on June 27 it would be acquired by Boston’s Bain Capital, LLC, a private equity firm, for $2.1 billion, including assumption of debt. GC shareholders are being represented by the law offices of Brian M. Felgoise, PC in Jenkintown, Pa.
MAP Pricing is OK Says Supreme Court
(Port Washington, NY - July 6, 2007) In a decision that can be considered a huge victory for the MI involving the FTC, The U.S. Supreme Court voted 5 to 4 on June 28 to allow price fixing by manufacturers. The ruling in the case Leegin Creative Leather Products v. PSKS overturns the 1911 “Dr. Miles rule,” which had made it illegal. The Supreme Court referred to MAP pricing or what some call “price fixing,” as resale price maintenance. The ruling was delivered by Justice Anthony M. Kennedy, who said: “Resale price maintenance can interbrand competition by encouraging retail services that would not be provided even absent-free trading…Offering the retailer a guaranteed margin and threatening termination if it does not live up to expectations may be the most effective way to expand the manufacturer’s market share by inducing the retailer’s and allowing it to use it’s own expertise and experience in providing valuable services.”
The Supreme Court also said the Dr. Miles rule was outdated and since manufacturers compete with other brands, competition should not suffer.
The victory for Leegin concerned lawyers for the Consumer Union, who said the ruling can result in higher prices for many products. The four dissenting justices agreed with PSKS and the Consumer Union. One of the dissenters was Justice Stephen Breyer. “The only safe predictions to make about today’s decision are that it will likely raise the price of goods at retail and it will create considerable legal turbulence as lower courts seek to develop workable principles. I do not believe the majority has shown new or changed conditions sufficient to warrant overruling a decision of such long standing.”
For a complete background of Leegin Creative Leather Products v. PSKS, see the May issue of the Music & Sound Retailer.
THE LATEST BUZZ
IMRA Annual Meeting Planned
The Independent Music Retailers Association (IMRA) is holding its first annual meeting on Thursday, July 26. Member and non-member independent retailers are welcome to attend the meeting, which begins at 1 p.m. in Room 17A&B of the Austin Convention Center. IMRA will elect its board of directors at the meeting, which will feature action plan reports from each of its working committees, as well as a speech by Oren Teicher, chief operating officer of the American Booksellers Association. Teicher will touch upon his association’s antitrust litigation, and how trade associations representing independent retailers can establish programs to benefit their members.
Italian band Lacuna Coil visited Ovation dealers across the country to demonstrate Ovation’s Elite T guitars, as well as offer autographs and question-and-answer sessions for fans. The band is pictured above during a performance at Falcetti Music in Enfield, Conn.
Yamaha Music Month Announced
Yamaha is taking the opportunity at Summer NAMM to promote its “October is Yamaha Music Month” campaign. Qualified dealers will get special product offers on accessories, drums, guitars, live sound, and other categories, as well as POP displays, Yamaha branding, Yamaha Music Month events, and a 12-months-same-as-cash financing offer with a Yamaha Credit Card. Additionally, there will be an “Employee ‘Spiff’ Program” that awards points, redeemable on Yamaha products, for every item sold. An “ultimate home theater” will be awarded to the “most deserving dealer,” and participating dealers will be given rebate coupons for customers to use on Yamaha purchases made after the promotion ends.
In other company news, Yamaha launched Music Finder+ for Clavinova CVP-300 owners. The program allows players to have songs sent directly to their Clavinova through Yamaha’s Internet Direct Connection. They can select from 5,000 records and 5,000 Performance Guides, which are digital sheet music.
Also, Yamaha announced that Yamaha Corporate Artist Affairs, a department of Franklin, Tenn.’s Music Marketing Group, is now a company subsidiary named Yamaha Corporate Artist Affairs, Inc. (YCAA) that will act as Yamaha’s primary liaison with artists around the world. Terry Lewis is president of the new subsidiary, while Chris Gero serves as vice president. Rick Young gave up his role as vice president of Yamaha Artist Services, Inc. to Jay Schreiber, general manager of Yamaha’s Band and Orchestral Division, so that he could take on the role of corporate vice president of YCAA.
Shure Makes History Channel
As part of its “Great Inventions Week,” the History Channel put the spotlight on important inventions of the 1960s. Among the many technological achievements featured on Modern Marvels’ 60s Tech edition were some of the Shure products that “played a role in shaping the history of American music.”
In other company news, Shure captured a large amount of counterfeit products following a raid in Taiwan. “This sends a clear message to counterfeiters that Shure is committed to protecting our brand and reputation,” said Sandy LaMantia, president and CEO of Shure. “We will not tolerate this activity and will do everything within our power to ensure that sub-standard products bearing our name stay out of the marketplace.”
Senators Support Music Education
Senators Chris Dodd of Connecticut and Lamar Alexander of Tennessee—both members of the Senate Committee on Health, Education, Labor and Pensions, and are chairman and ranking member respectively of its Subcommittee on Children and Families—recently introduced a resolution that recognized the benefits and importance of music education in schools. Additionally, the two sent a letter to the Government Accountability Office’s (GAO) comptroller general, David Walker, asking the GAO to study access to music and arts education in American public schools since the No Child Left Behind Act was passed.
“No child should be deprived of the chance to explore his or her creativity in a nurturing educational environment,” said Dodd. “Picking up a musical instrument, a paint brush, or a script can allow a child to discover a hidden talent and can serve as a much-needed positive influence in the midst of the many difficult decisions that young people face today.”
WEB ONLY BUZZ
Gibson Acquires Garrison Guitars
Garrison Guitars, based in St. John’s, Newfoundland, Canada, has been acquired by Gibson Guitar as part of its push into the acoustic guitar market. The company, which also manufactures solid-wood mandolins and mandolas, became part of the Gibson Acoustic division and new Gibson-branded Garrison guitars are shipping beginning this month. The Garrison factory is being retrofitted to produce these new models and Gibson says more than 40 new permanent full-time positions will be created as a result. The terms of the acquisition were not disclosed.
Kaman Golf Event Much Better Than Par
Kaman’s 20th anniversary golf event featured great weather and the last public appearance for Bob Saunders as CEO. Saunders thanked everyone during a dinner party after the round of golf on June 25, and was thrilled to spend one of his final five work days with so many people close to him. The beautiful sunny weather at Hop Meadow Country Club in Simsbury, Conn., marked a massive improvement to last year’s washout.
Elixir Announces MIAC Workshops
Those attending this month’s Music Industries Association of Canada have the option of taking in Elixir Strings’ “Space Management & Planogramming for Profit” workshops on August 26 and 27. Chris Lioi, a consumer product brand marketing/sales specialist at Elixir, leads the seminars, which cover topics like “capturing impulse dollars through strategic positioning, metrics for successful inventory control, maximizing use of secondary displays for enhancing financial performance, inventory rationalization, SKU management, product placement, and consumer buying behaviors.”
Distribution Deals Around the World
Canadian supplier Sounds Distribution was named the new Canadian distributor for GCI Technologies’ Gemini, Cortex, and iKEY Audio brands. Sound Distribution has specialized in the club/DJ, pro audio, lighting, and video markets since it opened in 1989
Also, Electronic Cable Services (ECS) took on the Italian distribution of Kaltman Creations products, including the Cable Coiler and Cable Slap Ties. ECS has been around more than 10 years and distributes brands like Switchcraft and GE Security Fiber. Additionally, Kaltman products will be distributed in South Africa by EtronSound, which has been dealing with sound, lighting, and staging products in the region since 1980.
ETA Appoints Starin
ETA Systems appointed Chesterton, Ind.-based Starin Distributing to act as the company’s master distributor in the United States. This comes as part of an effort to focus on “the installer/contractor and OEM segments of our business,” said Victor Pavona, ETA Systems' national sales manager.