Borders Doom and Gloom

A column article by: Ace Masters

Everyone seems to be talking about Borders since the news of their bankruptcy went public. Just about everyone I know has asked me if I have heard that Borders is going out of business.

Many Media outlets have also reported that Borders has "gone under," which is factually inaccurate.

Truth is, the economy is bleak right now, and Borders - like many other places - has been hit hard.

However, people are jumping the gun when they say Borders is out of business. It is true they have filed for bankruptcy, but this does not mean they are out of business.

Bankruptcy laws are quite complex, and there are different types of bankruptcy a company (or individual) can file for. To say they are out of business because they filed for bankruptcy shows a lack of knowledge regarding bankruptcy itself. (Note: Marvel Comics declared bankruptcy in the mid-1990s, yet they are going strong fifteen years later.)

Borders has officially filed for reorganization relief under Chapter 11 of the US Bankruptcy Code. This means Borders gets to stay in business while getting protection under the law from debtors while they reorganize, hopefully into a leaner, meaner business. Borders put out a press release which explains this in greater detail. Please check out that press release.

So, how is this going to affect the comic book industry? It depends on the market.

The Newsstand/Mass Market Effect

The Borders bankruptcy and the closing of 200 stores has already had a ripple effect on the publishing world in general, but some of the ripple effect actually happened long before Borders filled for bankruptcy. This was due to both financial woes and dropping sales. This is what led to Borders being late on payments to publishers and other creditors, or being unable to pay at all, which is what finally led to the filing of Chapter 11 bankruptcy.

The first major effect this will have on the comic book industry is that there will be 200 fewer stores in which graphic novels, trade paperbacks, manga and comics-related items can be sold. Since Borders is the second largest bookseller in the country, this will be a huge blow.

Fewer stores, fewer orders, a lesser amount of shelf space all leads to fewer sales. Which in turn means less profit for publishers.

Major publishers should weather this storm just fine. It is the smaller publishers, many who focus strictly on graphic novels, that will feel the immediate impact of this. Especially the ones who rely on Borders for the bulk of their sales.

The good news is, with the reorganization of Borders along with recent court approval of $505 million in funding, they will be able to pay for future orders.

The one thing we don't know yet is if this reorganization will extend to the products they carry. We'll have to wait and see on that score.

How will this affect the Direct Market?

The Borders bankruptcy should have little effect on the direct market. They do not deal with it, nor are they part of the direct market. However, the ripple effect that could help the direct market.

With so many stores closing, there are bound to be readers who are losing their main avenue for graphic novels and trades. These are people who otherwise don't go into comic book stores. These readers will probably do one of the following:

  1. Stop reading comic books altogether. Some people may not think it is worth the hassle to find another place to purchase titles. Others may see it as a way to save money and use it as an excuse to stop reading comics and graphic novels. (I know many people like this.)
  2. Order online through Amazon or another retailer.
  3. Find their way to a real comic book store and get their titles there.

Ideally for us and the direct market we want the third option to come into being. We want the readers who lose their local Borders as their source for graphic novels and trades to search out a local comic book store and start buying there. (Of course, this is if there isn't a Barnes and Noble around as well.)

All this is speculation. All we can do is talk, because no one at this point knows what Borders will do under Chapter 11 bankruptcy except Borders. So whatever the future ultimately is for Borders, only time will tell.

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