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Distributor Association's Future Is in Question

1 Mar, 2002 By: Joan Villa

This year's National Association of Video Distributors annual conference in April is expected to be a thinly attended affair for both distributors and suppliers, leaving participants wondering whether the trade association has much of a future.

Video Products Distributors, the NAVD's second biggest wholesale member behind Ingram Entertainment, will not attend the function, according to VPD president Tim Shannahan. But neither will many suppliers — only nine have confirmed for this year verses about 15 last year and more than 20 at previous gatherings.

Slated to attend are Paramount Home Entertainment, Warner Home Video, DreamWorks Home Entertainment, MGM Home Entertainment, 20th Century Fox Home Entertainment, Buena Vista Home Entertainment, Columbia TriStar Home Entertainment, USA Home Entertainment and Image Entertainment, according to NAVD executive director Bill Burton. Suppliers such as Artisan Home Entertainment and Lions Gate Entertainment will not go, while executives from New Line and HBO, whose product lines are both distributed by Warner, will not attend separately as they've done in the past. Universal Studios Home Video has not gone to the NAVD event since it streamlined its distribution of VHS rental product with Ingram and VPD in late 2000.

Burton says the group moved the event from its former Indian Wells, Calif., location to Santa Monica, adjacent to Los Angeles, to make it easier for studios to make the trip.

He attributes the decline to consolidation and closures among suppliers as well as distributors. The NAVD has seen its ranks dwindle from 12 in 1999 to seven this year. With VPD out due to “other obligations,” according to Shannahan, the April 21-23 conference will represent just four U.S. and two Canadian wholesalers.

Privately, suppliers question whether it's cost-effective to spend nearly $15,000 to go to the NAVD when they meet individually with wholesalers on a regular basis.

“In these times of belt-tightening … we just couldn't justify the cost,” explained one supplier who asked not to be identified. “Back in the old days when there were 10 distributors, it was an opportunity to meet with eight to 10 distributors at one function, now that it's narrowed down to four distributors and on top of that you're still paying the same costs as meeting with 10 distributors, it's hard to justify.”

Another supplier who has not attended for two years noted that the NAVD conference would “duplicate efforts” because “we're in constant communication” with wholesalers through the company's sales network.

For their part, distributors acknowledge that the association is at a crossroads, and one characterizes relationships within the group as having gone “from amicable to ugly” due to a rift between the smaller and larger wholesalers.

Shannahan, who has not attended the NAVD's last three board meetings, says he has not yet decided whether to renew when VPD's annual dues when the distributor's membership expires May 31.

But for some, the NAVD still provides a forum for addressing common issues and concerns with suppliers such as late shipments, DVD pricing, margins, copy-depth programs, and the disparity in DVD and VHS preorder dates.

“It's a chance for distributors to meet with studios and discuss issues common to distribution and it's also a convenient way for distributors and studios to meet individually and discuss individual issues,” noted David Ingram of Ingram Entertainment. “From that standpoint, we think the NAVD still serves a function and are planning to attend.”

Steve Scavelli, president of Flash Distributors, agrees that the few wholesalers who remain still benefit from group representation. “Especially with DVD as an emerging format, we have a lot more input to the studios as to how we want to see this format develop,” he explained.

The larger problem is that association members, once competitive but friendly, now mistrust each other's motives and are afraid to openly discuss issues, he said. Scavelli has a pending lawsuit, joined by defunct distributor ETD, against Ingram, VPD and Universal over alleged improper business dealings surrounding Universal's shift to two distributors for VHS rental product.

“I don't think the few remaining companies have common issues,” added another distributor who did not want to be named, “and, given the environment of the last 12 months, can't even speak to each other, either out of desire or instructions from counsel.”

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