Tower Records bankrupt?

WEST SACRAMENTO, Calif. (AP) – Tower Records, the pioneering record retailer that invented the music megastore, is likely to file for bankruptcy to aid a potential sale, a source close to the matter said Thursday.

A filing could involve swapping debt for equity in a move to reduce Tower's debt burden and clear the way for a potential buyer, the source said, speaking on condition of anonymity. The bankruptcy was likely to come within a week, the source said.

MTS Inc., the privately held parent of the West Sacramento, Calif.-based record retailer, declined to comment on the possible Chapter 11 filing. Such a filing would be nearly a year after MTS decided to sell Tower because it could not pay $5.2 million in debt on $110 million in bonds sold in 1998.

Tower Records, begun with a single store in 1960, the same year as the "Twist" dance craze, became internationally recognized for its in-store concerts and a deep selection of popular and obscure music. But the chain has fallen victim to a slump in the music business and its own missteps in a rapidly changing retailing environment.

"It doesn't surprise me," said Phil Leigh, digital music analyst with Digital Inside Media. "The brick-and-mortar retailers are facing a serious problem. They've got to deal with Borders and Wal-Mart and the trend toward digital distribution."

Tower Records owns about 100 stores, down from 171 during its heyday when annual sales topping $1 billion were routine.

The retailer's decline began in 1998 as falling sales, lack of hits and discounters such as Best Buy and Wal-Mart Stores Inc. cut into profits of traditional record stores.

The company borrowed $110 million in 1998 to expand into Great Britain, Asia, Canada and South America shortly after founder Russ Solomon boasted in a magazine interview that his company "can compete with anybody" and predicted a coming industry shakedown in which some companies would die and the "good ones will get bigger."

Yet as its troubles mounted, the company became known among music shoppers for steep prices – typically $18.99 for CDs, compared to $4 and $5 less at discount stores.

The company's June 2003 filing with the Securities and Exchange Commission reported $441 million in long-term debt and operating leases as of April 30, 2003.

Originally posted by brennser:
Yet as its troubles mounted, the company became known among music shoppers for steep prices – typically $18.99 for CDs, compared to $4 and $5 less at discount stores.

That's Tower's big problem. Who the hell is gonna pay $19 for a CD? When they have a big sale, Tower is terrific. But their regular prices are terrible. When I'm desparate for new music and need an immediate fix, I'll go to Tower and buy one CD (usually whatever's on sale), then go home and buy 3-4 discs from amazon, or directly from a band or label. The best thing about Tower is that I can browse the aisles, then go somewhere cheaper and buy what I want.

Thank you, thank you all you downloaders…oops I mean "sharers" :roll: Hope you're all happy now.

Tower online currently offers free shipping for orders over 20 bucks.

Does this mean I should try to spend that gift certificate soon?

Originally posted by Rutherford J. Balls:
Does this mean I should try to spend that gift certificate soon?

Since they aren't closing, but swapping debt for equity and reorganizing, I wouldn't worry too much about it - whoever buys Tower will probably honor all gift certificates, etc. Personally I wouldn't worry, and if I happened to walk by Tower I'd go in and spend it, but that's about it.

tower is ok…but i would only buy stuff there the day it comes out, as that is when they have their sales. dc area needs more indie/used stores

Originally posted by mankie:
Thank you, thank you all you downloaders…oops I mean "sharers" :roll: Hope you're all happy now.

I am, death to tower and their $19 CDs.

Yay for Amazon and their new and used section.

Originally posted by mark e smith:
Yay for Amazon and their new and used section.

I've never used the "Used and New" section of Amazon. Has anyone had any problems buying things that way?

Originally posted by mankie:
Thank you, thank you all you downloaders…oops I mean "sharers" :roll: Hope you're all happy now.

OH NO!!! We got a overpriced mega music chain shut down!!! what will we do now?

i will have you know, that even if i didnt download ANY music. i wouldnt shop at Tower.

Originally posted by Skeeter:

Originally posted by mark e smith:
Yay for Amazon and their new and used section.

I've never used the "Used and New" section of Amazon. Has anyone had any problems buying things that way?

I use that all the time, its great for expensive things like books… The $200 book Lulu wanted was half price in the new and used.

CDS have $2.50 shipping normally, but this still normally makes them cheaper than the Amazon store with the free shipping.

I believe if you do have problems Amazon gives you your money back, but it may take sometime. But I have never been in that position.

Originally posted by mark e smith:
I use that all the time, its great for expensive things like books… The $200 book Lulu wanted was half price in the new and used.

CDS have $2.50 shipping normally, but this still normally makes them cheaper than the Amazon store with the free shipping.

I believe if you do have problems Amazon gives you your money back, but it may take sometime. But I have never been in that position.

Cool - thanks for the info.

Originally posted by Skeeter:
Cool - thanks for the info.

I forgot to say…. I might be lucky as everthing I have bought on ebay has arrived too.

Just beware of electronics that seem to cheap to be true. No one is really going to sell a $3000 powerbook for $100. But the no +ve feedbacks gives them away on both amazon and ebay.

Originally posted by sonickteam2:

Originally posted by mankie:
Thank you, thank you all you downloaders…oops I mean "sharers" :roll: Hope you're all happy now.

OH NO!!! We got a overpriced mega music chain shut down!!! what will we do now?

i will have you know, that even if i didnt download ANY music. i wouldnt shop at Tower.

OK, I guess I'll pipe up…Yes, $18.99 is a lot for one CD. Here's why:

The wholesale price for a frontline (18.99)major label CD release is usually about $12-$13. That means that a retailer has to charge more than that in order to turn a profit. Every day, you can find THOUSANDS of CDs on sale at Tower, and not just the frontlines. Now, say that an 18.99 CD is on sale, usually for 13 or 14.99. Not much of a profit there.

It's pretty much all dependent on the labels and distribution. It's not Tower (or any other retailer) that is charging an arm and a leg for their product, it starts with the labels, which over the "good" years have become bloated and greedy. There is a huge misconception that "it only costs like, $.25 to make a CD, so why do I have to pay 20 bucks". I hear it all the time. Maybe so, but that has nothing to do with the store that you're buying CDs from.

Anyway, hope I'm making some sense…this can all get very complicated if the discussion is taken further…

But tower is the only chain that carries Meshugga Beach Party

I just got onto both tower and amazon and am not too thrilled with the pricing. 10.99 or there about was the norm not too long ago, throw in shipping and we were talking about 12 bucks per cd… and a great selection. Now however, 13.99 seem to be the going rate for most stuff. Throw in shipping and "screw that" rolls across my lips. There are a few "club" deals and used stuff deals, but with shipping, I'm not too sure this is the way to go. Any word on Napster? I heard 10 bucks a cd, and that sounds a lot high, but better than retail. I would say that over 75% of my recent purchases have been used cd's. Which can't be ethically much better than Kazaa, but Bureaucrats haven't spoken against it yet. But at 6 or 7 bucks for a used cd, selection is the only drawback.

I still find that some of the local independents are sometimes the best way to go, especially in Baltimore. Again, you are limited with your selection but they usually have a nice array of music to select from. Buying CDs at shows too can sometimes save you money if it's something you were planning on getting or would like to have to add to your collection.

Shipping charges can be a bitch unless you are buying a nice stock and the company gives free shipping with so much in purchases, like Amazon does sometimes, or the additional CDs charge is cheap, averaging out your total cost. I got very lucky in being unlucky the other week. I purchased a couple CDs from an online independent. The one CD was available and the other was sold out. When they sent me the avaible CD, instead of charging me the 1st CD rate of $5.and something, they only charged me the $2, which was for each additional. You can bet I'll be giving that customer friendly store more of my business.

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This thread is an interesting look at an interesting time…

godsshoeshine wrote:
dc area needs more indie/used stores

The area needs more stores that aren't just in hipster neighborhoods. Yesterday and Today was millions of times cooler than any of today's stores and it was in fucking Rockville.