Valley Media Gets Out of Rental Business19 Apr, 2001 By: Thomas K. Arnold
Valley Media today announced it is getting out of the video rental business,cutting 100 jobs, closing three facilities and turning over its rental business to VPD.
Valley will continue to ship rental product through May 22, although no new orders will be taken after April 27.
Valley and VPD have signed a "definitive letter of agreement" calling forthe Woodland, Calif.-based wholesaler to exit the rental business immediately, and for VPD to assume that segment of its operations.
Valley president and c.o.o. James Miller says Valleydidn't see much of a future in rental and wants to focus on sellthrough, which has always been its strength, going back to its roots as a music distributor.
"What we're looking at is to make sure we put all our efforts into something that has a future," Miller says. "The studios are starting to send a message to distribution -- Warner cut us out awhile back, Universal cutus out last fall -- so we're looking at the future.
"We're a big force in sellthrough, a not-so-big force in rental, so here's an opportunity for us to focus in on what we believe we've got the best future in."
Miller says the decision to leave rental came after a series of meetings with studio executives.
"We talked to the studios and everybody kind of agreed that our best play for the future is sellthrough," Miller says. "So we decided, let's take advantage of that and not try to push water uphill."
Valley's exit from rental will result in the closure of its Bristol, Pa., distribution center, as well as sales offices in Carnegie, Pa., and Boston.
Most of the 100 employees who will lose their jobs work at those facilities. Miller says video head Steve Cooper will remain on board, "because we're still firmly committed to video, but he's going to lose some staff."
Valley currently has around 250 retail clients to whom its sells rental product. These will be passed on to VPD with the promise of the same terms and conditions as they had under Valley.
The announcement comes on the eve of the National Association of VideoDistributors' annual trade conference in Indian Wells, Calif., which startsthis weekend.
NAVD executive director Bill Burton, contacted at his office in Owensboro, Ky., hadn't yet heard of the Valley move.
"That caught me quite off guard," he said. "I guess I would say it isn't all that great a surprise, because rental has not been their great area of expertise, and I'm sure it probably represents a valid and legitimate business decision on their part."
Steve Scavelli of Flash Distributors, an NAVD board member, had mixed feelings about the loss of Valley from the competitive rental distribution market.
"Although we see this as an opportunity to gain new business, and help us better serve some independent retailers, especially in the Northeast," he said, "we are saddened that a good distributor has been unable to withstand the economic pressures and the loss of the Universal rental product line."